Abracadabra

State-run People’s Bank is counting on an asset revaluation plus a Rs. 8 bn cash injection from the Asian Development Bank to stay afloat in the coming years. State-run People’s Bank is counting on an asset revaluation plus a Rs. 8 bn cash injection from the Asian Development Bank to stay afloat in the coming years. The bank needs Rs. 11.0 bn to meet capital requirements. A revaluation of assets in 2002, generated a Rs. 1.9 bn surplus.

Asset revaluations are done every five years. But People’s Bank was unable to cash in on the windfall as it does not have adequate Tier I capital.

“It’s some of the options we are looking at,” explains People’s Bank Chairman P Amarasinghe.

To side step privatising the bank, the government has generously stepped in using taxpayers money to recapitalise People’s Bank for the third time, using US$ 65 mn ADB funds earmarked for private sector development.

The government recapitalised the bank in 1993 and 1996 by issuing around Rs. 17.0 bn in reconstruction bonds.

Amarasinghe declines to comment except that the funds are due later this year. “The Asian Development Bank is not giving us the money directly, we