UAE central bank to oversee UAE Exchange operations

UAE Exchange stopped new transactions through its branches and online platforms/Bloomberg

The Central Bank of the UAE (CBUAE) will oversee operations management at UAE Exchange following the appointment of an accountancy firm to undertake ‘rapid contingency planning’ for an insolvency process by the currency exchange and remittances firm’s parent company, Finablr.

Earlier this week, Finablr, the owner of currency-exchange businesses such as  Xpress Money, Travelex Holdings and Unimoni, said that there was a material uncertainty about the group's ability to continue as a going concern.

Finablr, which listed on the London Stock Exchange less than a year ago, said that it found around $100 million in cheques dating from before its listing in May 2019 that were used as security for financing arrangements for the benefit of third parties.

UAE Exchange stopped new transactions through its branches and online platforms, except for the wage protection system, which the firm is allowed to operate until further notice.

The central bank’s inspection team has started an investigation into UAE Exchange’s operations to verify its compliance with the applicable laws and regulations. The regulator said that it will take additional action, if necessary, once the examination is completed.

The UAE-based payments firm has been facing problems for months now following problems at its Travelex business, which was hit by a ransomware attack late last year. The company is also facing disruption to its business from the coronavirus crisis.

Moreover, the company has been hurt by a liquidity squeeze at both group and operational business levels as well as the fallout from NMC Health, coronavirus-related travel restrictions and a downgrade of Travelex’s bonds.

NMC Health has been in freefall since December 2019, when short-seller Muddy Waters Capital accused it of financial improprieties.

The board of the hospital operator recently discovered that its debt position was materially above the last reported number as at 30 June 2019 and is currently estimated to be around $5 billion following the uncovering of more than $2.7 billion in previously undisclosed debt facilities.

NMC had appointed US Federal Bureau of Investigation Director Louis Freeh in charge of a review, which found that businesses owned by founder Bavaguthu Raghuram Shetty, who stepped down from the board in February 2020 and former Vice Chairman Khaleefa Bin Butti borrowed money from NMC’s supply-chain finance lender.