This move is a part of the measures taken by the centre to reform the public sector banks
“…we wish to inform you that in compliance with the government of India directives under PSBs Reform Agenda, our bank has initiated various steps. As part of its said initiatives and having regard to the agenda for rationalisation of bank’s overseas operations, the bank proposes to close its Hong Kong branch,” said the Kolkata based bank, in a stock exchange filing.
In June this year, the bank had revealed that the Hong Kong Monetary Authority (HKMA) had enhanced its supervisory arrangements on the Hong Kong branch while “assessing implications of the capital positions” of the bank. The HKMA, is the government authority in Hong Kong responsible assessing and handling monetary and banking stability.
Furthermore, the bank’s capital to risk-weighted assets ratio (CRAR) significantly fell to 8.69 per cent at the end of March quarter from 11.27 per cent at the end of December quarter last fiscal.
In its BSE filing, the bank had mentioned about the enhanced supervisory arrangements imposed by HKMA on its Hong Kong branch.It said, that HKMA in its advisory had asked the branch to maintain high quality liquid asset in Hong Kong equivalent to 100 per cent of unpledged deposits.
“ALHBHK (Allahabad Bank Hong Kong branch) should not proactively solicit customer deposits in Hong Kong. However, transactional deposits such as pledged deposits for commercial loans would be excluded from this supervisory arrangement,” the filing had said, adding ALHBHK should not incur additional non-bank credit exposures.