Sri Lanka bourse to cancel Seylan share trade

ECONOMYNEXT – Sri Lanka’s Colombo Stock Exchange will consider reversing a 1.3 billion rupee deal involving the sale of stock in a private bank held by state-run Bank of Ceylon.

CSE’s Head of Market Development Niroshan Wijesundera said the broking firm J B Securities had requested the trade to be cancelled with the agreement of both the buyer and the seller.

"The CSE will consider the request to cancel tomorrow," Wijesundera said. "It is within the trading rules."

A little over 13 million shares of Seylan Bank, a private lender that was bailed out, was sold by Bank of Ceylon, reportedly to a foreign investor at 100 rupees, or 15 rupees above market price last week.

Sri Lanka’s Prime Minister Ranil Wickremesinghe had ordered the sale to be cancelled and also said the deal will be probed by the financial police, according to state media.

Finance Minister Ravi Karunanayake had told reporters the deal was ‘illegal’.

There was no proper board approval though it was discussed and government nod was also not sought, official sources said.

However it was not clear whether the board of the bank had actually withheld permission for the sale, and whether or not the deal was within the remit of the bank’s investment committee, and the board was kept informed.

The sale amounted to less than 0.1 percent of the 1.6 trillion rupee assets of the bank.

Analysts said the affair will send negative signals to foreign investors, especially if the buyer was a genuine investor.

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"The key is whether the buyer was a genuine investor," a senior market professional who declined to be idenfiied said. JB Securities also had built up a reputation as a straight operator, several market participants said.

The move comes amid plans by the administration to set up a trust to own state enterprises in a bid to insulate them from political interference.  (Colombo/Dec19/2016 – Update II)
 

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