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| Sri Lanka Insurance to take bulk of Seylan shares |
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state-run Bank of Ceylon and National Savings Bank (NSB) may take smaller stakes, a media report said.
SLIC was recently returned to state ownership and management following a court order, and a board was approved by courts last Friday.
The Sunday Island newspaper quoting and unnamed source said NSB will take up the least volume of shares at it already has 3.47 percent of its voting shares and 3.67 percent of its non-voting shares.
The report said Sri Lanka Insurance will take up the "most number of shares" while Bank of Ceylon will come second.
Seylan was quickly put under the guidance of Bank of Ceylon by the Central Bank following a run on Seylan's deposits when an unregulated firm in its controlling Ceylinco group collapsed last year.
The Central Bank said about 3.0 billion rupees was needed to boost Seylan's capital.
The Sunday Island did not say whether the SLIC's life or general fund will take up the shares.
Analysts say that if SLIC's life fund is forced to take up Seylan shares on terms that a private sector player was not willing to do so, the burden may fall disproportionately on life policy holders.
But both NSB and Bank of Ceylon are fully owned by the state and the burden will be spread on all Sri Lankan citizens on any potential earnings foregone.
Both the Bank of Ceylon and NSB have been bailed out by the government to make up for losses on bad loans and employee pension fund shortfalls in the past.
In 1993 and 1997 the government spent 47.9 billion rupees from people's money to bailout state banks. NSB got 4.48 billion rupees while the Bank of Ceylon and People's Bank got 43.4 billion rupees.
The bonds to re-structure state banks were 12.5 percent of domestic debt and 6.2 percent of national debt in 1997. |
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The central bank said a bid for a 33 percent stake in Lanka Orix Leasing Company (LOLC) was not accepted because the offer "has not fulfilled all the parameters" in relation to "ownership limits".
The Sunday Island report said one of the issues that were not agreed with the regulator was the pricing of convertible preference shares to be issued by Seylan. |
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| Courtesy: LBO |
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