Big Merger

January 24 (LBO) –Commercial Bank of Ceylon and National Development Bank has entered into merger talks, the banks said Wednesday. “In the event the negotiations are successful, and the manner in which the merger may be achieved is agreed upon, the proposal for such merger will be submitted to the Monetary Board of the Central Bank, for its approval,” the bank’s said in similar statements.

Trading in the two banks’ shares was halted by the Stock Exchange.

Commercial Bank voting shares were last traded 219 rupees, up 14, while National Development Bank traded at 200 rupees up 25 cents.

“It is interesting to see whether the Monetary Board will approve the deal, because five years ago a merger between DFCC and Commercial Bank did not go through,” says Mohan Thangarajah, First Capital Equities.

Under Central Bank rules its Monetary Board has to approve share purchases above 10 percent by one shareholder in a bank.

DFCC was permitted to buy 30 percent of Commercial Bank from Standard Chartered Bank with Monetary Board approval.

Commercial Bank had assets of 210 billion as at September 2006, while NDB had a