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Sri Lanka NDB, DFCC merger only if shareholders wish it

Jan 15, 2015 07:11 AM GMT+0530 | 2 Comment(s)

COLOMBO (EcononyNext) - Sri Lanka's National Development Bank and DFCC Bank which were pushed to merge by the regulator need to do so only if shareholders wish it, a top United National Party official has said.

UNP Treasurer Eran Wickramaratne, who was a former CEO of NDB had criticized a central bank plan reduce the number of banks and non-bank lenders for being involuntary and forced, while he was in he opposition.

"We are for consolidation of banks but not if it is coercive," he said.

Wickramaratne was asked last week by EconomyNext whether the merger of NDB and DFCC would go ahead if the opposition won the election.

"Only if shareholders want to," Wickramaratne said. "We are not in favour of using force."

After the polls, he said the policy remained the same.

NDB and DFCC are in advanced stages over a merger. Several finance companies have been taken over or merged.

There have been concerns that NDB and DFCC were being merged to be used as indirect tools for the state to borrow in international markets, and show lower numbers of central government external debt to rating agencies and the public.

 


 

2 Comments

  1. Bandula January 15, 07:01 AM

    People should be thankful that the previous government has been evicted by the sensible people of this country. The previous government went on investing in Mega Projects which were untimely and did not bring in any benefits in the form of employment, financial return or development. These mega projects only generated multi millions in commissions for a few, economic and employment growth for the lending country, namely China and personal glory for egoistic leaders. The downside was the country getting into unmanageable debt. With the Government losing its borrowing capacity internationally the two inefficient economic agents of the government, the treasury secretary and CB governor plotted together to merge the two big development banks to enable them to borrow from abroad for these failed projects without having any thought of the future of these institutions. These two individuals was using their power which would have finally resulted in failed institutions and loss to the shareholders. Now the shareholders have an option to use their right and save their investments, two large institutions and the economy of the country.

  2. Investor January 15, 10:35 AM

    Finally some sanity has prevailed. DFCC and NDB - neither of which is fully owned or even 50% controlled by government of Sri Lanka - had been forced into a potential merger with little regard for whether shareholders desired same. Hopefully shareholders will now get a chance to at least vote on any potential merger terms at an EGM. Foreigners own approximately 25% and 40% of DFCC and NDB respectively.

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