March, 01 (LBO) – DFCC Bank is making a cash call of three billion rupees from shareholders to buy into an upcoming capital raising of Commercial Bank of Ceylon, the company said Thursday. DFCC gained 6.25 rupees to trade at 206.50 at mid-day Thursday.
The bank is issuing one share for every four existing shares at 140 rupees each. After the rights issue a bonus share for every five shares would be given on the increased capital.
DFCC said the 3,033 million rupees raised from shareholders would be used for expansion, boost prudential capital coming from Basle 11 rules and to participate in the Commercial Bank of Ceylon rights issue.
Analysts say the commercial bank subscription would take up 2.6 billion of the cash raised. DFCC owns 30 percent of Commercial Bank.
“As far as DFFC is concerned this is a good move because it strengthens their exposure to commercial banking,” Vajira Premawardhana, head of research at LOLC Securities.
It also owns its own commercial bank, DFCC Vardhana.
DFCC has also declared a 4.50 rupees dividend per share on the pre-rights issue capital.
In the December 2006 quarter the DFCC posted net profits of 345 million down from 397