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Sri Lanka’s Union Bank drops bond dealership

ECONOMYNEXT – Sri Lanka’s Union Bank of Colombo has been given the go ahead to cease being a primary dealer for government bonds, the central bank said.

“The general public is hereby informed that having considered the request made by the Union Bank of Colombo PLC (UBC), the Monetary Board of the Central Bank of Sri Lanka has granted approval for UBC to cease its operations as a Primary Dealer with effect from 01 May 2020,” the central bank which regulates banks and gilt dealers said.

“UBC will continue to function as a Dealer Direct Participant in the LankaSettle system and transact in scripless government securities on behalf of its customers and maintain its customer accounts in the LankaSecure system.

“The Central Bank wishes to emphasize that the above approval is purely based on a business decision of UBC and it does not affect carrying out any of its activities/services as a licensed commercial bank.”

The statement did not say why the bank decided to opt out of being a primary dealer, but the capital requirement had been raised over the years. At least one foreign bank had also opted out running a primary dealership.

(Colombo/Apr26/2020)