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Public Bail

June 26, 2009 (LBO) - Sri Lanka's Seylan Bank will be bailed out with the help of money from state institutions while a bid from a private investor was rejected because it did not meet ownership limits, the Central Bank said.
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There will be no change in the board.



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Seylan will also continue its link with the Bank of Ceylon under Central Bank decides to "discontinue with such assistance.

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"

The Central Bank, which is the banking regulator, said in a stock exchange filing that Seylan will issue shares to raise 3.0 billion rupees with support from state institutions.

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Lanka Orix Leasing Company submitted the only bid to buy a 33 percent stake in Seylan Bank.

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The regulator said the offer "has not fulfilled all the parameters" in relation to "ownership limits" and it had not accepted the bid.

At least one prospective bidder has said a 33 percent stake was not enough because any strategic buyer would eventually want to merge with the bank.

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The regulator put Seylan under the wings of state-run Bank of Ceylon and wanted a new investor to buy into it when a run on Seylan's deposits was triggered by the collapse of an unregulated firm in its owning Ceylinco group.

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In addition to state institutio

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