SrI Lanka's ETI Finance given liquidity support; cash injection expected: CB
Jan 02, 2018 18:23 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka's ETI Finance and Swarnamahal Financial Services with 35,000 depositors have run into a liquidity crisis requiring regulatory intervention but if a deal to sell assets through it they can be turned around, Central Bank Governor Indrajit Coomaraswamy said.
ETI Finance had deposits of 33.5 billion rupees from about 33,000 depositors and Swarnamahal Financial Services had 2.5 billion rupees of deposits from 2,300 depositors.
The central bank has ordered the two finance companies not to take deposits or give loans for the next six months, until it is restructured with new capital and liquidity support, when the decision would be reviewed.
Governor Coomaraswamy said the company had run into a liquidity problem as it could not meet increased oufflows following recent media reports, but the firm's subsidiaries had assets and it was no insolvent.
An investor had offered to buy assets in nine subsidiary companies of ETI for 75 million US dollars (11.4 billion rupees), in talks with the owners, he said. The central bank was not happy with the first offer of 60 million US dollars, he said.
There was a possibility of up to 85 million US dollars being raised if some other assets are also included, he said.
The subsidiaries were in media, cinema and hotels and there were also real estate.
There had been “serious mismanagement” in the two companies, which had violated some of the directions given by the central bank, he said.
A 4 billion rupees liquidity facility will also be arranged with a bank, which will be guaranteed by the central bank, he said.
ETI Finance Ltd got about a billion rupees in inflows each month from pawning and leasing repayments.
The central bank had appointed three officers to oversee the two finance companies.
Sepala Ratnayake, an ex-central banker will head a team which will include P A Lionel, an ex-Bank of Ceylon executive who will look into financing and investment and another ex-BoC official who was experienced in the pawning side of the business.
Because there were assets in the subsidiaries, there was a good chance that the ETI Finance could be turned around, Coomaraswamy said. (COLOMBO, January 02, 2018 - Update III)