The Central Bank has relaxed ownership limits in licensed commercial banks for both multilateral financial institutions and others.
As per the new directive, the new maximum percentage of ownership of shares is 15% for any share holder referred to in Sections 12(1C) and 46(1) (d).
The limit is 20% for Multilateral Fin-ancial Organisations (MFOs) such as the World Bank, International Finance Corporation (IFC), Asian Development Bank (ADB) and any other similar institutions as approved by the Monetary Board of the Central Bank of Sri Lanka. The 20% expansion is subject to the condition that the material interest so acquired have to be reduced to 15% within a period of 10 years from the date of stipulation. The move follows the Monetary Board having considered the benefits to the banking system through the investments by multilateral financial organisations in the shareholding of licensed commercial banks.
This specific move on MFO will facilitate the recent $ 50 million investment by IFC funds in Commercial Bank via a private placement for a 15.2% stake.Maximum shareholding in several banks vary. Among major commercial banks, such as COMB and HNB the maximum shareholding previously allowed was 10%. However at HNB, a business tycoon directly owns 18%, but was restricted to 10%.
At Sampath Bank, business leader Dhammika Perera-controlled Vallibel One holds 14.95% and Seylan Bank, the Sri Lanka Insurance holds 15%. At DFCC Bank, HNB owns 15% stake whilst at Nations Trust Bank, John Keells Holdings Group owns nearly 30%. At Pan Asia Bank, Dhammika Perera again owns near 30%.
(FT)