Apr 01, 2013 (LBO) – Sri Lanka’s central bank said it had approved in principle mergers among a few banks and non-bank lenders, in a regulator driven bid to build a financial sector made up of fewer, larger firms. Several non-bank lenders have seen bad loans rise over the past few years amid tighter economic conditions as well as weak credit practices.
More firms have also shortlisted merger and acquisition partners and are evaluating potential partners, the Central Bank said.
Sri Lanka’s National Development Bank and DFCC Bank have signed a memorandum of understanding to proceed with a merger.
The regulator said it had also approved several strategic investments to inject capital into banks and non-bank lenders which will allow them to strengthen their balance sheets.
“Several audit firms who were appointed by the Central Bank to carry out due diligence and valuation of the companies are in the process of finalising their reports,” the statement said.
“The Central Bank has continuously liaised with the selected audit firms to deal with any issues arising in connection with the due diligence and valuation processes, in order to ensure timely completion of these assignments.”