TFG depositors convert into equity
Ravi LADDUWAHETTY
Over fifty percent of the deposit holders of The Finance and
Guarantee Ltd (TFG) which once came under the troubled Ceylinco Group,
have converted their deposits into equity of the registered company.
These 2,100 depositors who account for half of the Rs 3 billion in
deposits at TFG have been offered B Class non voting shares.
This follows their confidence in the management of the TFG following
the acquisition by Union Bank recently and the depositors who have
converted their equity will have growth prospects even if they want to
exit their shares when the company goes public in accordance with the
Central Bank requirements, a senior Union Bank spokesman told Daily News
Business yesterday.
However, the listing will be after the full restructuring of the TFG
and would take around another year. “We have given the depositors the
option of either convert their deposits into equity of the troubled
finance company or maintaining the deposits as they are with the most
firm assurance that they will be safe in the light of Union Bank
injecting Rs 500 million and the overseas partner Shore Cap a further Rs
600 million.”
Responding to a question as to what impact the Union Bank acquisition
would have on the TFG depositors, he said there was nothing to worry as
the TFG’s new ownership had the ownership in new Union Bank which itself
has been successfully restructured and at the same time the backing of
Shore Capital of which the shareholders included the World Bank’s
private sector lending arm - the International Finance Corporation and
Commonwealth Development Corporation, the development arm of the British
Government. It has dealings with the Finnish Bank. The company will be
acting in accordance with the guidelines supervised by the CB and that
TFG depositors have no reason to panic.
The Central Bank’s motive is only to see that the interests of the
depositors are safeguarded. There will be no name change in either Union
Bank or TFG with the acquisition and both will be run independently.
Responding to a question as to whether the synergies of the two
institutions will be merged and how, he said Union Bank was a Bank and
TFG was a registered finance company and that each of the corporates had
their own individual growth paths.
He also said the strategy would be for Union Bank to increase its
branch network to 35 from the present 26. |
