CB welcomes merger of banks to strengthen banking sector
Hiran H. Senewiratne
MERGER: The Central Bank (CB) welcomes banks in the country to
be merged within the sector according to specified monetary and banking
regulations for the purpose of creating a strong and consolidated
banking sector in the country, its sources said.
At present, two leading banks namely Commercial Bank and NDB Bank are
in the process of merging with each other and the CB welcomes it if the
process according to stipulated regulations, CB Governor Ajith Cabraal
told the Daily News.
He said that strong banking sector is good for the country and it
would support large-scale development and infrastructure projects in the
country. Cabraal said that they welcome any bank to adopt an appropriate
management model, which is comfortable with them as long as it adheres
to all laws and regulations pertaining to the sector like the Monetary
Laws, Banking Act, 15 per cent maximum shareholding rules, he said.
Commercial Bank Senior Deputy General Manager (Finance and Planning)
Ranjith Samaranayake said that they are exploring the possibilities of a
possible merger with the NDB in the future. Two banks are negotiating in
regard to this matter. Commercial Bank sources said that board approval
has been obtained for this much-talked merger and waiting till the
shareholder and regulator approval.
However, HNB Chief Executive Officer (CEO) R. Theagarajah scotched
the rumour that on the merger with DFCC.
HNB has no plans to deviate from their five-year development plans
and also conscious of a trend setting within the banking sector, he
said. Theagarajah said that mergers and acquisitions are important but
the most important thing is the people factor. CEO also said that
mergers are good but have to consider the company’s business model,
whether it is fitting with the preservation of the brand.
Director General - Securities and Exchange Commission (SEC) Channa de
Silva said that consolidation in the banking industry is very important
at this juncture to face the global competition. However shareholders
have to decide what is optimal to them.
He said that once merge takes place the company has to ensure its
efficiency and the scale need to materialise in order to be competitive
globally.
The SEC wishes that the companies to be bigger and stronger meet the
capital requirement to compete regionally at least with India. |