LONDON: JP Morgan has cut its correspondent banking relationship with Emirates NBD, Dubai’s largest bank, as part of a global review of its business, sources said.
In a memo to staff last year, the US bank said it would scale back its relationships with foreign banks in order to comply with regulatory pressure to tighten risk controls. As part of this process, the bank has severed relationships in its cash management business in the Middle East, and has not spared Dubai’s largest bank by market capitalisation.
“JP Morgan is undertaking a global review of its banking relationships both on profitability and on compliance. In the Middle East they have cut many relationships, including with Emirates NBD,” a person with knowledge of the matter said.
Another Dubai-based banker said he had received similar information. “It is not very surprising given the pressure they’ve been under from regulators. They are cutting any relationship that holds even a slight bit of risk,” he said. JP Morgan does not comment on individual relationships, but a source said: “It is well known we are tightening our controls, especially in the corresponding banking business...and we mentioned it in our Q3 earnings.”
An Emirates NBD spokesman said the lender did not comment on the relationship between the bank and clearing banks.
Correspondent banking, which involves activities such as processing transactions and clearing dollar payments for foreign banks, has historically been a core part of JP Morgan’s business. It emerged in August last year that this business would be scaled back at JP Morgan and the bank would not take on any new clients. Reuters
