DFCC Bank to reduce ComBank stake
Central Bank Monetary Board ruling:
The DFCC Bank has been asked to reduce its stake in Commercial Bank
to 15 per cent within 18 months under the Central Bank (CB) Monetary
At present DFCC Bank owns 29 per cent of Commercial Bank
stakes/shares and the Central Bank Monetary Board insisted them to
divest 14 per cent of its stakes to public in the Colombo Stock Market,
Director Supervision of CB Ananda de Silva told the Daily News.
The DFCC Bank is expected to file counter objections, for the court
case filed by the Central Bank. This case is expected to be taken before
the Court of Appeal in September. However, DFCC Bank’s 2007/2008 Annual
Report also indicated that they are in the process of disposing excess
shares of Commercial Bank within the stipulated time.
However, DFCC Bank’s core activity has been long-term project
financing to the private sector. In response to market opportunities and
demands, the Bank’s scope of business was broadened to include
investment banking, fee based services, venture capital, fund
management, stock broking, consulting and commercial banking through
subsidiaries and associate companies.
Director Bank Supervision also said the Monetary Board imposed the
ruling to hold upto 15 per cent shares of any Bank in order to broadbase
the shareholding among the public.
The share of profit after tax of Commercial Bank excluding dividend
received for the period included on the consolidated financial statement
was Rs 423 million in the current period compared with Rs 416 million in
the comparable period. The contribution from DFCC was Rs 106 million
compared with Rs 87 million the previous year.
Therefore, the Central Bank Monetary Board ruling will apply to all
banks and all the financial institutes in the country.
The reason for this ruling was that certain business corporates hold
majority stakes in banks and financial institutions in the country,
preventing the broadbasing of the shareholding among the public.
DFCC Bank offers a gamut of financial services to its customers and
is continuously looking for new horizons, reaching for greater heights
and mapping new game plans to reach its vision of being the premier
financial services group in the country, the Bank said.