Bank Al Habib Limited ceasing operations in Seychelles |21 September 2021
After seven years in operation in the Seychelles, foreign financial institution Bank Al Habib Limited (BAHL) is to close down its business in Seychelles.
The announcement came yesterday in a press conference organised by the Central Bank of Seychelles (CBS), in which Governor Caroline Abel noted that the CBS has approved a formal request lodged in July for the Karachi, Pakistan based foreign financial institution to cease operations in Seychelles.
As per Governor Abel, the bank whose services and products are aimed mainly at foreigners as their target market, was led to the decision based on the challenges posed by the de-risking phenomenon that has affected many countries, including Seychelles, and which has resulted in the bank’s difficulty to implement its business strategy.
“When they came to us this year with the demand to cease operations, they informed us that what they had intended as pronounced in January 2014, they were not able to deliver on the plan. One of the main reasons they proposed to us is that de-risking has affected them very much in putting their plan to work. We at the CBS occasionally talk about this and with de-risking, the reality is that every bank in the world, including us in Seychelles need to have an intermediary bank when they are effecting transactions overseas. A bank in Seychelles when receiving inflows foreign exchange or when making payments overseas in any currency, there must be a bank in the middle to process the transaction, to reach its final destination,” Governor Abel explained.
“Over the last few years, in the whole world, international standards were being raised, especially in relation to Anti-Money Laundering and the Combating the Finance of Terrorism (AML/ CFT), so when international banks feel that the standards within a jurisdiction are not up to par, through the different assessments and pronunciations of the European Union (EU) or the Organisation for Economic Cooperation and Development (OECD) which did not necessarily put our reputation at an acceptable level, international banks are concerned. And 2014 is the period whereby Seychelles started getting affected by the de-risking phenomenon. And it has gone on for the last few years, whereby our banks in Seychelles found themselves faced with difficult times, as they had to be accountable for transactions from and to Seychelles. Recently, we are starting to make some effort in ensuring our frameworks are up to a standard which is more acceptable on the international front, and which will improve our reputation. This takes time, but this time can affect a financial institution’s intentions to conduct business as it would wish,” Governor Abel explained.
The request was received by CBS on July 9 and was approved in accordance with Schedule 5 of the Financial Institutions Act (FIA), 2004, as amended, by the CBS Board on Monday September 13, 2021.
As per Head of the Financial Surveillance Divison, Aaron Leong-Pon, the decision has been communicated to BAHL, which is required to produce a notice of closure. The notice has already been published in the Official Gazette and a local newspaper, and submitted to the Registrar of Companies.
BAHL, headquartered in Karachi, Pakistan, obtained a license in January 2014 to operate as a foreign financial institution in Seychelles, and commenced operations on January 20, 2014. The organisation presently has a customer base of 10 depositors, all of whom are foreigners.
“The bank is fully solvent and has adequate liquidity to repay all depositors and other creditors. The bank has a lot of assets and the majority of them are liquid so it can at any point in time pay off all of its debts. As mentioned, it barely has any depositors, and has just 10 clients to a sum of R8,942,000, and then obviously it has other creditors such as rent, but these costs are minimal, as compared to liquid cash available,” Mr Leong-Pon noted.
Following CBS’ approval of the voluntary closure, BAHL has ceased all business operations, and is only open to undertake the necessary winding up process, which includes repaying all depositors and other creditors in respect of its operations in Seychelles.
As per the requirement of Paragraph 4 of Schedule 5 of the FIA, CBS has appointed a Supervising Agent, ACM Associates, to oversee the winding up of the bank.
As regulator of the country’s banking sector, CBS is working in close collaboration with the bank to ensure that the interest of its customers and the public is safeguarded.
CBS would also like to affirm that BAHL is fully solvent and has sufficient liquidity to honour its obligation towards all depositors and repay all debts.
“BAHL’s operation in Seychelles was very small, and it did not really exploit with local clients, with its main client base being foreigners. As the Governor mentioned, since it started operating it was not able to execute its strategy as it wanted, to target African markets and attract investors. But it is important to note that the organised closure of BAHL will not have any great impact on the local financial sector. It is also important to highlight that the other financial institutions and banks are stable,” Mr Leong-Pon added.
CBS intends for the winding up process to be effected in a timely manner, by November 30, 2021, which is the date set for the final revocation of BAHL’s science, and subsequent ceasing of operation. BAHL can be contacted on 4410040 for any queries regarding its closure. Anyone having queries, complaints or clarifications pertaining to the bank’s closure may also contact CBS on 4282000, and choose line 3 or email email@example.com
BAHL currently employs three expatriate staff, and CBS has been informed that they will all be transferred to the bank’s head office in Pakistan, following the closure.
CBS would like to reassure the public that other financial institutions and the overall banking sector is financially sound and stable, and the closure of BAHL will have minimal impact on the banking sector. In line with its commitment of transparency, CBS will ensure that the general public is abreast of developments pertaining to the closure of BAHL.