Nail Biting

The government is expected to give its verdict on People’s Bank’s restructuring proposal in three-weeks time detailing capital injection plans. The government is expected to give its verdict on People’s Bank’s restructuring proposal in three-weeks time detailing capital injection plans. The technically insolvent bank is asking to issue long-term convertible bonds to meet Central Bank’s minimum capital requirements.

The bank is also looking at revaluing its real estate assets. The bank wiped off its negative networth in March, but is still short of Rs. 11 bn.

“Nothing is finalised. SEMA [Strategic Enterprise Management Agency] has promised to get back to us in about three weeks time. There will not be a sale of shares but a financial restructuring on the lines of selling our non-performing assets to a special purpose vehicle and then issue zero coupon bonds on the back of our loan loss reserves, is something that we have suggested,” People’s Bank’s Chairman P Amarasinghe said Wednesday.

If approved, the move will technically meet Central Bank’s minimum capital requirements, but still falls short of meeting Tier II capital.

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