Brotherly Act

Sampath Bank said Friday it has infused more capital into Union Bank which will raise its stakes from 16 to 24 percent. Sampath Bank said Friday it has infused more capital into Union Bank which will raise its stakes from 16 to 24 percent. With an extra Rs. 100 million capital infusion, Union Bank now becomes an associate company of Sampath Bank.

Sampath had earlier led a consortium to bailout Union Bank by pumping in around Rs. 700 million in 2003.

The fresh cash infusion comes as Sri Lanka’s fragmented banking industry hunts for funds to meet Central Bank’s capital requirement.

In April, the Central Bank said all banks must have at least Rs. 2.5 billion ($25 million) in Tier 1 capital by the end of 2007, a fivefold increase from the current requirement to hold Rs.500 million.

The move, is expected to encourage mergers of small banks and forcing all to make more efficient use of their funds, analysts say.

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