Finance Deficit

Feb 23, 2010 (LBO) – Sri Lanka’s The Finance Company said its loss for the December quarter shot up to 626 million rupees from a loss of 86 million rupees a year ago. It experienced a run on deposits when its parent, Ceylinco Group, suffered a crisis of confidence after another group firm, Golden Key Credit Card Company, collapsed. The firm showed a loss per share of 30.67 rupees compared with a loss of 4.22 rupees the year before, according to interim accounts filed with the stock exchange.

In the nine months ending December 31, 2009 losses amounted to almost 2.2 billion rupees compared with a profit of 15.3 million rupees the year before.

According to a segmental analysis of the nine month results, The Finance Company had suffered a steep fall in income on hire purchase, leasing, land sales and housing loans.

The Finance ran out of capital at the end of the second quarter.

Merchant Bank of Sri Lanka has been appointed by the banking regulator to manage the troubled finance firm.

MBSL has taken a stake in Ceylinco Investment Company, the major shareholder of The Finance Company, which was part of the Ceylinco group when it got into trouble.