Nov 29, 2008 (LBO) – Sri Lanka’s Standard Chartered Bank unit says it was not directly affected by a court order which halted payments due under a hedge it arranged for a state-run oil distributor and said it welcomed a probe into the deal. Sri Lanka’s Supreme Court Friday ordered the country’s central bank to probe the deal which it said was ‘iniquitous’ and propose remedies.
“Standard Chartered Bank welcomes further investigation and is confident of a favorable outcome as more details are revealed,” the bank said in a prepared statement to press queries.
“As an international bank, recognized globally for our high levels of governance, we always seek to comply with relevant local and international laws and regulations.”
The court order came after a cooking gas supplier and petroleum users including an opposition politician filed public interest petitions.
Sri Lanka’s state-run Ceylon Petroleum Corporation found that oil hedges made under a complex options structure went against it when oil prices suddenly collapsed and it was faced with payments of around 30 million dollars a month.
Citibank, Deutsche, state-run People’s Bank and Commercial Bank of Ceylon, a private bank had also sold options structures to CPC.