HNB continues capital raising spree

HNB PLC yesterday entered into an agreement with the German Development Finance Institution, DEG to raise US$ 25 million through a eight year subordinated loan which forms part of tier II capital of the bank. The funds raised would be utilised to finance the growth in small and medium enterprises which is one of the most important sectors supporting the post conflict growth in Sri Lanka.

The loan agreement was signed in Colombo by Dr. Ranee Jayamaha, Chairperson and Rajendra Theagarajah, Managing Director/CEO of HNB and Dr. Hubertus Pleister, Director Asia at DEG and Matthias Goulnik, Vice President Asia at DEG. With the signing of the agreement, the total capital and long term debt raised by HNB during the past 10 months surpasses Rs. 21.5 billion.

At the signing ceremony, Dr Ranee Jayamaha said “we are delighted to partner with DEG in this all important agreement to raise long term tier II capital for the future growth of the Bank.The funds raised from DEG will not only boost the loanable funds available to HNB but also form part of a solid foundation in fostering the medium to long term growth of the bank. This demonstrates the confidence the foreign investor community has placed on HNB as the bank has been successful in raising foreign funds totalling to US$ 75 million within a period of one month in 2012”

Rajendra Theagarajah said “This transaction is unique, as HNB is one of the very first banks to raise tier II capital, denominated in US dollars with a long term tenure of eight years and clearly demonstrates HNB’s ability to raise long term funds from a well reputed overseas source at a highly attractive rate of interest and is no doubt a testament to the strong and stable growth recorded by the bank in the recent years.” Dr. Pleister added: “With our commitment, we will strengthen Hatton National Bank PLC thereby enabling it to further expand its financial offer. At the same time,we are fostering the financial sector in Sri Lanka, facilitating the access to long-term investment capital especially for small and medium-sized enterprises. These enterprises are a major engine behind economic growth, particularly in developing countries.This is why the promotion of these enterprises is a special concern for DEG.”

DEG, a subsidiary of Germany’s KfW, is one of the largest European development finance institutions for long-term project and company financing. For 50 years, DEG has been financing and structuring the investments of private companies in developing and emerging economies.

DEG invests in profitable projects that contribute to sustainable development in all sectors of the economy, from agriculture to infrastructure and manufacturing to services. It also focuses on investments in the financial sector in order to facilitate reliable access to capital locally.DEG’s aim is to establish and expand private enterprise structures in developing and transition countries, and thus create the basis for sustainable growth and a lasting improvement in the living conditions of the local population.