Morning After

January 10, 2007 (LBO) – Sri Lanka’s state-run Bank of Ceylon plans to sell off shares owned in NDB and DFCC Bank this year, to top up a gap in its pension fund, a senior official said Wednesday. Sri Lanka’s largest bank in terms of assets, is carrying a two billion rupee gap in its defined pension fund at the moment.

We are in the process of finalising approval from state authorities to sell our shares in NDB and DFCC during the first six months of this year. The proceeds should supplement around 70 percent of the pension fund shortfall, General Manager/CEO, S N P Palihena told LBO.

Analysts estimate the market value of equity stakes in NDB and DFCC to be worth over 3.5 billion rupees.

Pension rights for new recruits were scrapped in 1996 as part of a government drive to rescue state banks, which paved the way for these entities to be recapitalized in 1997.

Prior to 1996, Bank of Ceylon employees were given a pension, besides the statutory Employees Provident Fund (EPF) and Employees Trust Fund (ETF) benefits.

Unions affiliated to all state banks are now pressing for a second pension for staff who joined after 1996.

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