ISLAMABAD -  Acting President Habib Bank Limited Rizwan Haider on Wednesday said that the primary reasons for closing the HBL’s branch in New York was the bank's business with a Saudi bank.

The US’s regulator had pointed out some non-compliance of standards, including Anti-Money Laundering and had fixed penalty of $630 million, he said while briefing the Senate Standing Committee on Finance, which met in the chair of Senator Saleem Mandviwalla.

He informed the committee that there are other allegations against HBL, which included opening of bank accounts of Iranian Oil Tanker Foam ul Ameen and Axact Company. The committee also took up the matter of closing of the Habib Bank Branch in New York. The committee was told by the State Bank of Pakistan that the branch was opened in New York in 1978. Things were going smooth till 2006 but in 2006 New York Regulator entered into a written agreement with the HBL branch due to faults in AML compliance, Suspicious Activity Reporting, transaction reporting and training of staff.

The bank struggled between satisfactory and average ratings till 2015 when it was given below average 'marginal' rating. In addition taking Al-Raji bank as a business client also worsened the conditions as the bank was taken as a high risk customer.

Acting President HBL Rizwan Haider told the meeting that the primary reasons of closing the branch was bank's business with the Saudi Bank but there are also system and management issues behind it.

It was also told that the allegations made by the regulator in terms of proscribed transactions were later proved wrong and taken back. However, it was found that the compliance system of the branch has been weak.

The committee has given a three-month time period for holding consultations and finalisation of TORs and final report on the separation of cadres of Account and Audit in line with the summary approved by the Prime Minister.

Auditor General of Pakistan, additional secretary finance division and additional secretary establishment division while briefing the committee told that separation of cadres was not the actual intention of the initial summary nor was the direction in the summary from the Prime Minister's Office.

They said that it is a lengthy exercise which can have legal and administrative implications as most of the officers of this service group are not in favour of this separation. It was stated that the functional separation has already occurred but the service should remain intact.

Regarding the fraud of NBP's branch in Bangladesh, the committee was told that seven people found responsible in the investigation have been arrested, one is absconder and the six others are Bangladeshi. The committee members asked whether the intention is just arrest of those responsible or we are trying to achieve something else from the investigation. The committee asked NAB to provide thorough details of when was the fraud committed, who detected it, when was it reported, what action was taken by the board and on whom the responsibility was placed. The committee was also told that the percentage of non-performing loans against the total amount of loans has decreased over the course of last few years. The committee was told that most of the non-performing loans are in the agricultural sector. The Non-Performing Loans (NPLs) have amounted to Rs614 billion out of Rs6.6 trillion total loans. The SBP was asked to provide performance report of ZTBL in next meeting.

The meeting was held under the Chairmanship of Senator Saleem Mandviwala here at the Parliament House and was attended among others by Senators Nasreen Jalil, MohsinLeghari, Mohsin Aziz, Saud Majeed, Kamil Ali Agha, Osman Saifullah, Auditor General of Pakistan, President National Bank of Pakistan and officials from HBL, NBP, SBP, NAB, finance and establishment divisions.

IMRAN ALI KUNDI