June 7, 2007 (LBO) – DFCC Bank has been asked to cut its 28.98 percent stake in Commercial Bank to 15 percent under Sri Lanka’s banking laws, the development financier said. Commercial Bank of Ceylon has informed DFCC Bank that if the stake was not cut by October 23, 2008, DFCC its voting rights would be trimmed to only 10 percent.
“This directive has been issued under Direction No 1, of 2007 issued by the Monetary Board under the Banking Act No 30 of 1988 as amended,” DFCC said.
The Monetary Board or Sri Lanka’s central bank is the country’s banking sector regulator.
Sri Lanka’s banking laws has ownership limits for single and connected parties in commercial banks.
The Commercial Bank was embroiled in a take-over bid mounted by the Stassens group of billionaire businessman Harry Jayawardena.
The group also has slice of DFCC Bank. Commercial Bank’s current management beat off a take-over attempt going to court and asking for voting rights of Stassen connected parties to be suspended according to provisions in the banking law.
Commercial Bank recently raised cash through a rights issue which was subscribed by DFCC.
DFCC originally bought