Equity Control

June 24, 2009 (LBO) – There would be more interest in Sri Lanka’s Seylan Bank if a larger equity stake than one third is offered to a strategic investor, the head of cash-rich NDB Bank which dropped out of the race said.

“The environment today is different,” says Wickramaratne.

“Today we have a – relatively speaking – stronger corporate governance framework for financial services, particularly for banks and therefore we don’t need to be regulated only through bank ownership.”

Wickramaratne had previously been involved in merging ABN Amro Bank’s local unit to NDB.

Ceylinco group chief Lalith Kotelawala and connected parties control 23 percent of Seylan Bank, which will shrink to 15 percent after the central bank issues new shares to Seylan’s strategic investor, diluting holdings of original shareholders.

A number of share trusts will control over 17 percent of the banks equity after dilution.

“I think there is acknowledgement now form the regulator, that maybe the limit should be higher, and I’m saying we should go down that road,” says Wickramaratne.

The cash rich NDB group could benefit from the low cost deposit mobilization ability of the 92-branch Seylan network.

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