Rs. 500 m joint venture Investment Bank by DFCC Bank and HNB

Hiran H. SENEWIRATNE

TIE-UP: DFCC bank and Hatton National Bank (HNB) will set up an equally owned joint venture Investment Bank and the total capital investment would be Rs. 500 million, its sources said.

This joint venture Investment Bank will carry out the amalgamated corporate finance and capital market

 business of the two institutions, DFCC General Manager/CEO Nihal Fonseka told the Daily News.

He said, DFCC practises good corporate finance systems but does not have a strong islandwide distribution and primary dealership business like the HNB.

The mix of both synergies would be able to penetrate their operations not only islandwide but also eventually to other regions as well, he said.

It is envisaged that the new Investment Bank will also be the Group Holdings Company for the other related entities of the two banks including the Stock Broking and Primary Dealership Business.

This entity would mainly focus on consultation matters which will not directly be involved in retail banking activities, he said.

He further said that HNB has an islandwide strong banking network, which could easily make the presence, felt of the new holding within a short time span with its strong backup.

Fonseka who would be the Chairman of the new entity said that the primary objective of this undertaking would be through the pooling of the strengths and resources of both companies to attain a critical mass and enable synergies while providing the full service range of a typically integrated investment banking.

When Daily News contacted HNB CEO/General Manager R. Theagarajah, he said they mutual by agreed to issue statements from one source.

He said they have given the leadership to Nihal Fonseka to manage the new Investment Bank. Jayantha Perera will serve as Managing Director and Theagarajah will function as one of the directors.

The new entity will not need to seek a licence under the Banking Act. However, since the two promoters are licensed banks, prior regulatory approval will be required to be obtained for this initiative.

The process of setting up the Investment Bank, including seeking the required approval from the Central Bank and other relevant regulatory agencies, would be initiated shortly with a view to commencing operations during the first half of this year.