August 16, 2018 (LBO) – Central Bank of Sri Lanka (CBSL) registered finance company The Finance Company (TFC) reported a staggering loss for the quarter ended June 2018.
June quarter losses were Rs743mn during the 3 months, a continuation of the trend of losses that has endured over the last several years.
The Finance Company (TFC) was the largest Registered Finance Company (RFC) in the Ceylinco Group of Companies. After the collapse of Golden Key in 2008, all other finance companies in the Ceylinco Group quickly teetered on insolvency. Seylan Bank was subject to a government orchestrated bailout and was able to remain afloat.
Management of TFC was taken over by the CBSL, whose representatives continue to administer the CSE listed entity today. During this period the company has continued to bleed with the chance of a turnaround almost impossible.
At present time the company has a balance sheet that appears very shaky. The company has negative shareholders funds of over Rs15bn, and deposits close to Rs30bn.
Based on the large negative equity position, and the recent trend of losses, it is a virtual certainty that depositors in TFC will have to eventually take a future hit. Taxpayers will also likely be losers as well.
The CBSL is now in the messy process of cleaning up the EAP group finance companies. EAP group depositors are up in arms with their capital frozen in the defunct institution. Tax payers will also likely to be on the hook for part of the EAP bailout.