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Thursday February 22nd, 2024

Sri Lanka Catholic church head doubtful Easter victims will find justice under present admin

Malcolm Cardinal Ranjith

ECONOMYNEXT – The head of Sri Lanka’s Catholic church, Malcolm Cardinal Ranjith, has expressed doubt that justice will be done for the victims of the 2019 Easter bombings under the present administration.

Anyone who comes to power through the blood of innocents will earn God’s wrath and will not enjoy that power for long, Cardinal Ranjjith said at a commemoration event on Thursday (21) marking 30 months since the 2019 Easter bombings.

“The rule of has been brought to ridicule today.

“When friends are accused, they are acquitted. Opponents are punished even where no wrong has been done. In this context, it is clear we will not be able to get the recommendations of the [presidential commission of inquiry on the attack] implemented in the present administrative structure,” he said.

The cardinal, who has been increasingly and scathingly critical of what he claims is the slow pace of government probe into the bombings, once again demanded to know what was happening with the investigations that were promised by the government that came to power in the months that followed the attack.

“If one is innocent, why not allow the freedom to probe it? Why not empower the officials? Why the attempt to brush this under the carpet?” he said.

“One might do this only if they are guilty, if they realise that their nakedness will be exposed.

“The guilty tries to pin the blame on others and hide away,” the archbishop said.

“Those who shed the blood of innocents will never know peace. That must be remembered,” he added.

The archbishop has repeatedly expressed his frustration over the pace of the investigations and an alleged inability to find the masterminds of the attack, which he has implied on several occasions was the result of a “grand conspiracy” – a claim originally attributed to former Attorney General Dappula de Livera.

Related: Sri Lanka Attorney General claims “grand conspiracy” behind Easter attack

The Easter bombings were carried out by a small band of suspected Islamist terrorists, though opposition parties in Sri Lanka, some members of the Catholic community and others have expressed scepticism over the official narrative.

In August this year, Ranjith also questioned claims that the terrorists had been backed by the Islamic State of Iraq and Syria (ISIS).

Related: Head of Sri Lanka Catholic church alleges attempt to pin Easter attack on ISIS

In July, Ranjith said he was sceptical of what he called a politically compromised law enforcement’s ability to probe the “grand conspiracy” behind the bombings.

Related: Sri Lanka Easter attack probe: Cardinal sceptical of politically compromised law enforcement

On Monday (18), the cardinal claimed that President Gotabaya Rajapaksa had told him that he could not implement certain “unpopular” recommendations made by a presidential commission of inquiry (PCoI) on the 2019 Easter bombings.

Related: Sri Lanka Easter attack probe: Prez said he couldn’t implement some recommendations, claims cardinal

“… two days after the [PCoI] report was handed over, [the president] called me, and he asked me ‘how I cannot do all this, because there are some provisions in the report that if I implement, I will become unpopular’ (sp),” the cardinal claimed on Monday.

“The government has not implemented most of the recommendations of this report. The report has been a waste of time and a waste of hope to all of us,” he said, calling for international assistance in uncovering the truth.

The recommendations made by the PCoI included criminal proceedings to be instituted against former President Maithripala Sirisena and others. The report also identified a number of Islamist groups accused of causing or supporting “racial and religious disturbances” and the Sinhalese Buddhist organisation known as the Bodu Bala Sena (BBS) which the report said had “contributed to the events”.

Related: Sri Lanka Easter attacks commission recommends criminal proceedings against President Sirisena

The cardinal said that, in the run-up to the November 2019 presidential polls, Rajapaksa assured the public that the Easter attack – which had killed 269 people and injured over 500 – would be probed as soon as he came to power.

Speaking at the commemoration ceremony on Thursday, held at the St Anthony’s Church in Kochcikade – one of the bomb sites – Ranjith said: “A majority of 269 victims lost their lives in churches. Those who came to the house of God to thank Jesus for his sacrifice were shred to pieces and hung on the beams of this roof. Their blood was everywhere in these holy grounds.”

“If anyone attempted to come to power through the blood of innocents, God’s wrath (udahasa) would be upon them and they will never be able to enjoy that power. They must remember that,” he said.

Invoking divine intervention, the cardinal said the country has been cursed possibly as a result of the Easter tragedy, referring to an “a disastrous situation in the country like nothing ever seen before”.

“If they are not guilty, they must allow these investigations to take place independently. If they’re not linked to these, action must be taken against those the PCoI have named as guilty, without fear. They must be brought before the law.

“The question arises to all of us, are they being protected because [those who promised investigations] are party to the wrongdoing?” he added.

Cardinal Ranjith said he would pray to God to reveal the truth and mete out justice to the victims.

“We pray to St Anthony to expose every force behind the attack. Please perform that miracle for us,” he said. (Colombo/Oct21/2021)

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Merchant Bank of Sri Lanka and Finance given ‘BBB+(lka)’ rating by Fitch

ECONOMYNEXT – Fitch Ratings said it assigned Merchant Bank of Sri Lanka and Finance Plc (MBSL) a first-time national long-term rating of ‘BBB+(lka)’.

“MBSL’s rating is driven by our view that the parent, BOC, would provide extraordinary support to MBSL, if required,” the rating agency said.

“We assess MBSL’s standalone credit profile as being weaker than its support-driven rating because of its small franchise with 1.8% market share of sector loans, evolving business model, and weak financial profile, which is reflected in its poor asset-quality metrics, weak profitability and high leverage.”

The full statement is reproduced below:

Fitch Ratings – Mumbai – 22 Feb 2024: Fitch Ratings has assigned Merchant Bank of Sri Lanka & Finance PLC (MBSL) a first-time National Long-Term Rating of ‘BBB+(lka)’.
The Outlook is Stable.

MBSL is 84.5% owned by Bank of Ceylon (BOC, A(lka)/Stable) and other BOC group entities. BOC is the largest banking group in the country.

Key Rating Drivers

Shareholder Support Drives Ratings: MBSL’s rating is driven by our view that the parent, BOC, would provide extraordinary support to MBSL, if required. BOC’s ability to support MBSL is reflected in its credit profile, which is underpinned by its standalone strength. We believe that any required support for MBSL would be manageable relative to BOC’s financial capacity.

Our support assessment also takes into consideration BOC’s majority shareholding in MBSL, increasing product offerings by MBSL that are complementary to those provided by BOC, the parent’s oversight of MBSL’s policies and strategy through board representation, and the usage of the BOC brand by MBSL in its business operations, which raises reputational risk for BOC should MBSL default.

Limited Importance to Parent: MBSL is rated two notches below BOC due to its limited importance to the group. MBSL mainly serves high-yielding, under-banked segments that have limited overlap with BOC’s core customer base, but this is partly offset by BOC’s focus on increasing merchant banking via MBSL to strengthen group feebased revenue. MBSL made up 0.8% of BOC’s consolidated assets at end-September 2023, and makes negligible contribution to group profitability. MBSL also has considerable management independence and there is limited operational integration between the entities.

Weak Standalone Profile: We assess MBSL’s standalone credit profile as being weaker than its support-driven rating because of its small franchise with 1.8% market share of sector loans, evolving business model, and weak financial profile, which is reflected in its poor asset-quality metrics, weak profitability and high leverage. MBSL focuses on vehicle leasing, and gold- and property-backed loans. It has a high risk profile stemming from its significant exposure to borrower segments that are highly susceptible to economic and interest rate cycles.

Stabilising Economic Outlook: We expect the operating environment for Sri Lankan finance and leasing companies (FLCs) to continue to stabilise following the inflation and interest-rate shocks over the past two years. Easing inflation and interest-rate pressures should provide steadier conditions for FLC sector performance. Some headwinds linger, as higher taxes will continue to weigh on household finances in 2024. Investor confidence will also take time to recover. Nonetheless, we expect economic activity in Sri Lanka to improve in the financial year ending March 2025 as GDP growth recovers.

Asset Quality Pressure: The company’s loans that are more than three months past due were high at 25.3% of total loans at end-September 2023 (end-2022: 24.3%) due to its high risk profile. Nonetheless, MBSL’s focus on bad debt recovery has resulted in a decline in the non-performing loan ratio from a much higher level in previous years. We expect a pick-up in borrowers’ business activity and declining interest rates to aid loan collections in the medium term.

Weaker Profitability: MBSL’s pre-tax profit/average asset ratio was low at 0.9% in 9M23 and -0.9% in 2022, primarily due to the sharp reduction in its net interest margin and increase in operating costs on lower business volumes. We expect MBSL’s profitability to improve in the near to medium term, though it will likely remain weaker than that of peers, as its lending operations pick up, borrowing costs decline, and bad debt recovery improves.

History of Capital Shortfalls: MBSL’s capital adequacy ratio (CAR) rose to 16.9% (equity Tier 1 ratio at 13.4%) by end-September 2023 from 12.3% (11.7%) at end-2022, and against the regulatory minimum CAR of 12.5%. MBSL suffered significant capital shortfalls in 2020, with CAR at end-2020 of 5.6% below the minimum required 10.5% due to losses. BOC injected equity into MBSL in 2021 to improve its capitalisation. The breaches resulted in the regulator limiting MBSL’s deposit and lending balances, which affected its business franchise. The caps were removed after its capital ratios increased.

The recent improvement in CAR was due to significant reduction in total gross loans, an increase in gold loans, which carry lower risk weights, in the lending mix, and an increase in Tier 2 capital. We expect capitalisation pressure to ease in the medium term due to improved profitability prospects.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

MBSL’s rating is sensitive to changes in BOC’s credit profile, as reflected in BOC’s National Long-Term Rating, as well as Fitch’s opinion around BOC’s ability and propensity to extend timely extraordinary support. Developments that could lead to a downgrade include:

– meaningful reduction in the parent’s ownership, control or influence that could weaken its propensity to support the subsidiary

– notable decline in MBSL’s capital buffers, indicating reduced timeliness in financial support to back growth or meet regulatory norms

– insufficient or delayed liquidity support from the parent relative to MBSL’s needs, which hinders MBSL’s ability to meet its obligations in a timely manner

– sustained weak performance of MBSL that we believe will weaken the parent’s propensity to support the subsidiary

– a material increase in size relative to the parent that makes extraordinary support more onerous for the parent.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

An upgrade is less likely in the near term. However, a significantly greater strategic role for MBSL within the BOC group, along with closer integration with BOC across broader functional areas and greater sharing of the BOC brand name besides the operational usage of brand, could be positive for the rating in the long term.

Date of Relevant Committee
19 February 2024

References For Substantially Material Source Cited As Key Driver Of Rating
The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings With Credit Linkage To Other Ratings
The rating is linked to rating on the parent, BOC.

This report was prepared by Fitch in English only. The company may prepare or arrange for translated versions of this report. In the event of any inconsistency between the English version and any translated version, the former shall always prevail. Fitch is not responsible for any translated version of this report.

Additional information is available on www.fitchratings.com

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Sri Lanka to get update on GSP+ cycle at EU joint commission meeting

ECONOMYNEXT – Sri Lanka will get an update on the GSP+ trade concessions at a Joint Commission meeting with the European Union, the Foreign Ministry said.

Three working groups on Governance, Rule of Law and Human Rights, Trade and Economic Cooperation, Development Cooperation will report to the Joint Commission.

“The European Union will also brief on the current developments in the EU including an update on new GSP Regulation and the new cycle of the EU GSP+ concessions,” the statement said.

The full statement is reproduced below:

The 26th session of the Joint Commission between Sri Lanka and the European Union will be convened on 22 February 2024 in Brussels. The meeting will be co-chaired by Secretary of the Ministry of Foreign Affairs of Sri Lanka Aruni Wijewardane and EU European External Action Service Deputy Managing Director for Asia Pacific Paola Pampaloni.

Sri Lanka delegation to the Joint Commission will comprise senior officials of the Ministry of Foreign Affairs, Attorney General’s Department and Ministry of Finance.

The EU- Sri Lanka Joint Commission serves as a platform for dialogue and cooperation between Sri Lanka and the European Union, covering a broad range of bilateral and multilateral issues of mutual interest inter alia trade and investments, development assistance, fisheries, education, counterterrorism, governance and human rights, Indo-pacific & maritime security and environment.

The outcome of the three Working Groups which reports to the Joint Commission, Governance, Rule of Law and Human Rights, Trade and Economic Cooperation, Development Cooperation will be presented to the Joint Commission.

The European Union will also brief on the current developments in the EU including an update on new GSP Regulation and the new cycle of the EU GSP+ concessions.

The previous session of the Joint Commission meeting was held in May 2023 in Colombo.

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India’s BAL Investment interested in land around aragalaya site

ECONOMYNEXT – India’s BAL Investment has expressed interest in a land in Colombo which was used as a popular people’s protest site in 2022.

“An acre of land at Baladaksha Mawatha was requested for a joint development project by Bal Investments,” Prasanna Ranatunga, Minister of Urban Development and Housing said in parliament on Thursday.

“They have deposited a fee of 10,000 dollars and signed a memorandum of understanding on 16 February 2024. We are waiting for the government’s assessment report. The project has not been approved, we are still considering it in keeping with all rules and regulations,” Ranatunga said in reply to a statement by National People’s Power MP Vijitha Herath. (Colombo/Feb22/2024)

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