Confidence Building

Dec 31, 2008 (LBO) – There is no danger in dealing with Sri Lanka’s regulated financial sector and authorities have acted swiftly to build confidence in Seylan Bank by bringing it under a state-bank, Central Bank Governor Nivard Cabraal said. The central bank dissolved the board of directors of Seylan Bank and put it under the administration of state-run Bank of Ceylon after a crisis at a member firm of Ceylinco group which controls the bank, led to customer withdrawals.

“With the Bank of Ceylon behind it, we call upon Seylan Bank customers to continue as normal,” Governor Cabraal told reporters Tuesday.

“We assure you that they can continue transactions without any danger.”

Golden Key Credit Card Company, an unregulated Ceylinco group firm, defaulted on its customers two weeks ago, triggering uncertainty.

Ceylinco chief Lalith Kotelawala has promised to repay customers and the group also said it was selling out of Seylan to raise funds to settle Golden Key’s obligations.

Sri Lanka’s stock market investors have already given a thumbs-up to the regulatory action, and Seylan shares surged after a trading halt was lifted Tuesday. Eastman Narangoda, an experienced banker who headed state-run National Savings Bank at one