Rescue Operation

DFCC Bank is tipped to inject around Rs. 400 mn in fresh capital for a 76 percent slice in the cash starved MERC Bank.
DFCC Bank on Monday said it was conducting a due diligence study on the small privately held MERC Bank, with the intension of acquiring it.rn

rnMERC Bank started off with a Rs. 250 mn capital, but has since seen its capital wiped off due to high start up costs. A lack of a foreign exchange dealer licence, also crippled its operations during its formative years of operation.rn

rnMERC is carrying accumulated losses of over Rs. 300 mn.rn

rnThe bank has deposits of around 670 mn, while its lending portfolio is said to be around Rs. 290 mn. rn

rnFinancial analysts believe an equity injection of over Rs. 300 mn should give the bank a fresh lease of life.rn

rnThe marriage is likely to get Central Banks blessings. Central Bank has recently pushed a consortium led by Sampath Bank, the Chinkara Group and National Savings Bank to inject over Rs. 600 mn to rescue Union Bank.rn

rnThere