Sampath proceeds with Rs 1.7 b Rights Issue
Funds for branch expansion and increasing lending
portfolio:
Ravi LADDUWAHETTY
Sampath Bank PLC will now proceed with its Rs. 1.7 billion Rights
Issue where one share for every four shares will be offered at Rs. 100
each.
“The Bank recently asked the Colombo Stock Exchange for a
postponement of the Rights Issue as it planned to raise Rs. 100 per
share but in depressed market conditions, the share price had dipped to
the nineties which was the reason why the bank asked the Exchange to
postpone the issue,” Sampath Bank Company Secretary S. Sudharshan told
Daily News Business yesterday.
However, with the share rising to Rs. 97 and above, we are confident
that the share price will rise to over Rs. 100 making the Rights Issue
sensible and the Board of Directors has decided to proceed with Rights
Issue with the market picking up, he said.
He said the Bank will await CSE approval which will be subsequently
followed by the Bank presenting it for the shareholder approval.
The funds will be used for the routine branch expansion which takes
place where 10 branches are added annually and for the expansion of the
lending portfolio.
Sampath Bank which commenced the first online banking system in Sri
Lanka and the Automated Teller Machines, has a total tally of 112
branches, the remaining three branches to be opened by end 2008 will be
Wellawaya, Kattankudi and Buttala. It has already opened seven branches
this year at Matugama, Batticaloa, Chilaw, Mawathagama Hingurakgoda
Akkaraipattu and Kalmunai.
The branches opened in 2007 were Balangoda, Ja-Ela, Narammala, the
Kandy Corporate Branch, Gampola, Nikaweratiya Pelmadulla, and
Ambalantota Wattegama.
However, ten branches scheduled for 2009 have not been determined
yet. The Bank has also not determined the ratio between the investments
for the branch expansion and the amount to be disbursed for income
generating assets.
However, Sudharshan conceded that the investment for the setting of a
branch is around Rs. 15 million. “ The investments are almost the same
for each branch irrespective of the location and the only variable is
only the rent costs,” he explained.
Responding to a question on Sampath Bank being grilled by the Central
Bank on a US$ 20 million Bond Issue by a Japanese Investment Bank and
another investigation by the Terrorism Investigations Unit on a US$ 5
million loan given to a client for the purchase of a ship, Sudharshan
said that they were not a probe in that sense of the word but a routine
inspection to clarify matters.
“The Central Bank does routine checks on banks like auditors to
verify company matters. This is not a threat on the survival and
continuity of the bank,” he said. |