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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 Board ruling.

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.

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