Sri Lanka to tighten ownership limits in banks
Jan 02, 2019 19:02 PM GMT+0530 | 0 Comment(s)
ECONOMYNEXT - Sri Lanka will tighten share ownership limits of Sri Lankan banks along with stricter qualifications for key management positions to improve governance, the Central Bank Governor said.
"We believe that share ownership in banks needs to be broadbased to strengthen corporate governance and to avoid ownership concentration, dominance in the boards, conflict of interest and risks associated with related party transactions," Governor Indrajit Coomaraswamy said delivering a monetary policy road map for 2019.
"Therefore, the existing requirements on share ownership will be reviewed and certain additional measures will be brought in."
At the moment a single individual or company, acting with related parties, can own up to 10 percent a bank, which could be increased to 15 percent with special permission from the Central Bank.
There are also some legacy ownership stakes in some banks.
Coomaraswamy said quality of appointments to banks will be made stricter in the future.
"Fit and proper assessment criteria for appointment of directors, chief executives and key management personnel of banks will be strengthened further to appoint the most suitable and qualified individuals to the top positions in banks," he said.
"Only persons with proven track records of good conduct and financial integrity would be considered for such appointments," he said.
However, the government is the biggest stakeholder of some listed banks, controlling between 10-35 percent of some private banks through state financial institutions and a pension fund.
In the recent past, controversial persons have been appointed to the boards of 'private' commercial banks where state agencies had large stakes. (Colombo/Jan02/2019)