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| Tuesday, 13 July 2004 |
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Following new re-capitalisation, restructuring process: Union Bank posts Rs. 4.2 m profit after tax following losses in three years by Irangika Range The Union Bank has recorded Rs. 4.2 million profit after tax for the year ended March 2004, showing a significant growth after three years of continuous losses. This sustainable growth was mainly due to the bank's new re-capitalisation and re-structuring process. The new business earned an after tax profit of Rs. 20 million in 2003 compared to a loss of Rs. 161 million in 2002 and Rs. 254 million in 2001. The deposit base was Rs 5. billion in 2003 while it was Rs.4 billion in 2002. The total assets have also increased to Rs. 5.58 billion for the year ended March 2004. Rs. 5.43 billion was recorded in 2003 while it recorded Rs. 4.52 billion in 2002 with the implementation of the re-structuring plan. The Union Bank CEO Mahendra Fernando, the new CEO who joined the Union Bank in May 2003 to lead the re-structuring process said the bank's non-performing loan portfolio was eroded during the period 2000 to 2002 and the results showed increasing losses. "Finally the bank was also unable to reach capital adequacy requirements. According to this situation, the bank suddenly realised the necessity of new Capital and structure to rebuild the bank. Sampath Bank, Chinkara Capital Ltd, Caritano Venture Capital Incorporated, Union Apparel, Associated Motorways, Associated Electricity and Penguin group were mainly involved to re-capitalise the bank. They invested Rs. 525 million while the National Savings Bank invested Rs. 100 million," Fernando said. Fernando said along with the re-structuring process, the new board of directors and the advising committee was appointed. " Each re-structuring step was transferred for beneficial interests such as specific non-performing loan schemes launched for special purposes. The bank is continuing to manage and recover the non -performing loans under an agency agreement of special purpose vehicles," he said. "The company never faced service providing and interest paying problems and even the loss situation because of high IT related products and services. There are over 25 banks in the country who are really competitive. Unless we are really at a cutting edge, the bank cannot sustain itself. Our customer-focused services and products are developing frequently. The bank has introduced the significant collection of "firsts" which shows a innovativeness of the the bank's products and services. Among them are the "Bank Roaming" system which we offered our customers, the flexibility to bank from any net-worked branch, "Smart Phone" system which any account could be accessed with a Smart Card System generated cash and cheque deposit slips, a 24-hour Phone-Banking service with automatic fax back facility, introducing treasury derivatives such as Interest Rate collars and Foreign Currency Backed Notes, introducing clear cheques drawn on all branches presented through a clearing house, setting up an exclusive Discount Office in Kandy to deal in Treasury Bills and introducing E-mail Banking. We awarded the ISO 9002 Quality Certification for the full range of commercial banking. Recently we introduced a new product called "rNone". It offers the customer the ability to deposit their gold articles in the bank and the cash advance that is given up to a pre-advised limit can be withdrawn at any time, anywhere in the world from a Cirrus ATM through our own "rNone" card," he said. "Our target market is focused on good base of corporate customers and we expect to deal with small and medium scale industrialists. We will promote and create more relationships with them because it is good to be a healthy bank. A good loan portfolio is also the key point to develop the bank. Banks should analyse carefully their loan books when they hold discussions for granting," he said. "My target is to make the bank financially healthy and profitable. I have planned various systems to clear the loan portfolio, control unnecessary expenditure and motivate staff within a short period of time. Various motivational training programs and relationship management programs are ongoing and today we have a united and motivated workforce," he said. |
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