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Pandora’s Box

Officials from K. Seeds Investments Pvt Ltd (at left) with officials from Commercial Credit and Finance PLC (at right)

October 12, 2006 (LBO) – Sampath Bank may be a possible takeover target once again, when the small bank moves to amend its articles and allow a single shareholder to own a bigger stake, an equity research report said Thursday. Sampath has no controlling shareholder, but businessmen Dammika Perera and his related companies control around 15.7 percent of the bank, though 5-percent of this stake is not registered, says C T Smiths Stockbrokers.

The current Banking Act, restricts single ownership to 10 percent.

However, Sampath's own articles of association has a 5-percent ceiling, which the bank is now seeking shareholder consent to amend, to comply with the Banking Act, and Colombo Stock Exchange and Securities & Exchange Commission rules.

A few years ago, business tycoon Harry Jayawardene and his associated companies including Hatton National Bank, failed in a bid to take control of the smaller bank.

Sampath's single largest shareholder, Dammika Perera also has a controlling 25 percent stake in the listed Pan Asia Bank (PABC). PABC, another smaller bank, is finding it difficult to meet Central Bank's minimum capital requirements of 2.5 billion rupees by end 2007.

"Given the changing dynamics of the banki

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