Group Risk

Dec 12, 2012 (LBO) – Sri Lanka’s financial regulators will monitor banks connected to conglomerates closely in the future as firms and the financial sector becomes bigger in the future, Central Bank Governor Nivard Cabraal said. “I know many of you are not only looking at the banking sector but you have other businesses as well,” Cabraal told directors of banks in a forum called by the Central Bank Wednesday.

“In good times if the other sectors are doing well it can supplement your bank. It will give the necessary impetus to the bank as well. And he bank can also provide support to the other sectors

“But in difficult times you need to concentrate on ensuring that conglomerate risks are also taken care of.”

Cabraal said an inter-regulatory committee made up of the Central Bank, the Securities and Exchange Commission, the Insurance Board and the Stock Exchange will be looking more closely at conglomerate risk.

“As you grow you will find that there are inter linkages, there are influences that could take place from one type of industry to another,” he said.

“Because, if there is a risk to the banking sector, it is not a standalone risk. That is why we are so keen about ensuring that the overall conglomerate