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| Tuesday, 29 July 2003 |
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Sampath Bank to finalise Union Bank restructuring next week by Ravi Ladduwahetty Sampath Bank's restructuring of Union Bank will be finalised in the first week of August, authoritative banking sources told the Daily News yesterday. Sampath Bank, which has already invested Rs. 150 million in the crisis ridden Union Bank, will issue a Bond which will have a maturity value of Rs. 3.5 billion in the next twenty years. With this bond, the special purpose vehicle- Serendib Capital (Pvt) Ltd will take over part of the Non Performing Loans (NPL) and some part of the cash for which they will issue their own bond, the sources said. Sampath Bank will guarantee the maturity proceeds of the Bond that Serendib Capital will issue in favour of Union Bank. Union Bank has raised Rs. 525 million of additional capital funds inclusive of a Rs. 100 million Debenture from National Savings Bank and is also expecting another Rs. 100 million in A Class Shares within the next few weeks. This will take the Capital of Union bank to nearly 900 million, they said. Sampath Bank already has a 16 percent stake in Union Bank with the Rs. 150 million capital injection and the A Class shares of Union Bank has grown to Rs. 525 million. An attempt is being made to make the A Class of Shares Rs. 600 million which will enable the Tier I capital of Union Bank to exceed Rs. 1 billion. Union Bank, which is a fully computerised bank, will implement a series of innovative strategies aimed at turning it around and plans are also under way for Internet Banking as well with a new team led by the new CEO Mahen Fernando, who has over 25 years of banking experience in the Middle East. |
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