Meets CB's capital adequacy requirements
Seylan set to expand
Seylan Bank plc has met Central Bank's
(CB's) Tier 1 and Tier 2 capital adequacy
requirements and expects to obtain CB
approval to open more branches, its CEO
Ajita Pasqual told reporters on Thursday.
The Bank in recent times had been precluded
from opening more branches due to not
meeting those requirements, but with a
successful rights issue that raised Rs.800
million, coupled with profits made, it now
meets CB requirements and is geared to
obtain approval to open more branches, he
The Bank at present has 93 branches and 22
It has some 3,800 employees. However, its
recently appointed chairman Eastman
Narangoda said that none of its staff would
Pasqual confirmed that Seylan had a run on
its deposits (estimated to be to the tune of
Rs.700 million) at the height of the Golden
Key Credit Card company crisis, but this has
now stopped with the appointment of a new
CB, using the powers vested on it by the
Monetary Law Act, changed the Seylan Board
and appointed Narangoda, a banker to the
post of chairman and made Lalith Withana, an
accountant at Brandix, Nihal Jayamanne (PC)
and Naomal Goonewardena, a corporate lawyer
and accountant as board directors.
Subsequently R. Nadarajah, a banker (former
managing director PABC Bank) and Rear
Admiral (retd.,) Ananda Peiris were also
appointed to the Board.
Narangoda said that at present he is the
only executive director of the Bank. But
steps are being taken to appoint another
executive director, he said.
Meanwhile Pasqual said that most of those
withdrawals were from retailers, such as
pensioners. But now they are returning, he
He further said that the Bank's non
performing loans ratio stood at 12%, higher
than the industry average.
Narangoda told reporters that their top
priority is to manage risk, stabilize the
bank and win the confidence of depositors
He said that he would look into improving
the Bank's credit quality, investments and
off balance sheet items. "Taking steps to
mitigate any possible operational risks,
market risks and credit risks will be high
on the agenda," he said.
Meanwhile Pasqual said that the Ceylinco
Group and connected parties were having a
23% equity stake in the Bank. Some parties
are looking at acquiring this stake, he
said. In addition the Bank's four Employee
Share Option Plans (ESOPs) have some 27%
equity stake in the Bank.
The Bank's Board controls the ESOPs, Pasqual
Govt., crowds out private sector
With banks dodging lending to the corporate
and retail sectors due to rising bad loans,
and therewith focusing their investment on
government Treasuries, that has begun to
relieve pressure on yields in secondary
market trading in Treasury Bonds (T. Bonds),
market sources said.
T. Bonds maturing on 1.4.12., which fetched
a weighted average yield (WAY) of 20.02% at
Tuesday's primary T. Bond auction saw those
yields slip by 77 basis points (bp) to
19.25% for T. Bonds of a similar maturity
period, ie maturing on 2012 at Friday's
secondary market trading.
This was also so for T. Bonds maturing on
2010, which, only on Monday were fetching
21% in secondary market trading, but fell
steeply by between 150-175 bp, to be trading
at between 19«-19¬% levels by Friday.
They said that both foreign and local banks
were among the investors in secondary market
trading in T. Bonds.
Central Bank (CB) statistics showed that
foreign investments in T. Bonds rose from Rs.
17,572 million to Rs. 18, 400 million, a Rs.
828 million week on week (WoW) increase in
the week ended Wednesday.
Due to demand, sources expected T. Bill
rates to come down at Tuesday's primary
auction. Last week's T. Bill auction saw the
WAYs for all three tenures, 91, 182 and 364
days, slip by two bp each to 17.31%, 18.55%
and 19.10%, WoW respectively.
CB T. Bill holdings in the week ended
Thursday contracted by Rs. 1,747 million WoW
to Rs. 135,849 million.
Business of Photography
Tom Tidball (60), an American married to a
local, launched his third local, and sixth
international photo album to the Sri Lankan
Titled "People Sri Lanka" with colour
portraits of Sri Lankans, including the
famous and the "ordinary," those albums are
priced at Rs. 3,990 each.
But his bestseller was a similar photo
publication which he did, focusing on "all
aspects" of Sri Lanka in 1992.
Running into its third publication, with
each publication comprising 2,000 prints;
each of those books are priced at Rs. 2,900.
However Tidball also has his share of
A similar photo album which he did on Sri
Lanka's beaches and its underwater life
during the 2003 ceasefire period, which also
included shots from the East and certain
parts of the North, have sold only 2,000 of
those to date, after having had made 4,000
Those had had earlier been priced at Rs.
4,300 each; but due to poor sales, Tidball
was forced to reduce the price of those
albums by Rs. 1,400 to Rs. 2,900 each.
He however said that his biggest success was
in the USA-a poster of a Nebraskan American
football team taken at sunset in 1987, that
sold 10,000 prints at US$ 12 a print, with
him being paid royalty for his work.
Tidball also does photography for
advertising agencies here, having being
employed by Minds on Tuesday to take some
photos of children, for a commercial for
Hatton National Bank.
But strangely, though he is married to a
shareholder of Grants, an advertising
agency, he told The Sunday Leader that
Grants has not employed him for decades.
Tidball 's wife Sriyani is the eldest
daughter of the late Reggie Candappa, the
founder of Grants.
Tidball however is not into commercial
wedding photography, in which he says that
there is a lot of money in Sri Lanka. He
also sells his photos online.
Credit cards for Rs. 200,000 earners
American Express (AmEx) together with
SriLankan Airlines launched a credit card on
Wednesday that targeted those who earned a
minimum of Rs. 200,000 and above.
Manoj Gunewardena, CEO SriLankan Airlines
told reporters that the data base that they
plan to tap includes 3,000 gold members
under their now defunct Skywards Miles
programme which was done in conjunction with
Emirates Airlines, 7,000 silver members
under the same project and 120,000 normal
Those who qualified for gold membership
under the old programme were those who flew
a minimum of 50,000 miles annually;
silver-25,000 miles and normal or "blue,"
those who flew four sectors, with a return
flight on SriLankan being classified as
having covered two sectors.
The use of the new card entitles the
customer to gain free miles when flying in
the airline, with this card even being
accepted by selected supermarkets like a
usual credit card from which purchases could
Nations Trust Bank PLC (NTB) CEO Zulfiqar
Zavahir answering reporters said that AmEx
has captured 30% of the top end credit card
market in Sri Lanka.
NTB is the sole issuer of AmEx credit cards
in Sri Lanka.
NTB Chairman Ajit Gunewardene speaking at
its launch said that they begin the new year
with optimism. He was confident that the
combined strength of NTB, SriLankan and AmEx
would make this card a success.
Meanwhile, Gunewardena of SriLankan in his
speech said that due to the global
recession, the airline industry has been
transformed into a buyers'market. He said
that the slackness in demand for overseas
travel far outpaced the decline in oil
prices. Reduction of airline capacity could
also not keep pace with the reduction in
Agriculture exports slump 8%
Agricultural exports earnings slumped by
8.1% in November 2008, year on year (YoY).
Tea export earnings slumped 10.8% mainly due
to price reductions in the international
market. However, Colombo auction prices
remained higher than at other auction
centres despite a 10% increase in export
volumes, the Central Bank in a statement
Rubber export earnings also dipped by 7.7%
in November, YoY, due to a 16.1% reduction
in prices. Minor agricultural crop exports
which have been a significant contributor to
export earnings in recent times, depicted a
reversal of its growth trend in November
2008, sliding 22.7%, YoY.
However Exports grew by 11.6% in November
2008, YoY, to record earnings of US$ 645
This was led by the 18.7% growth in
industrial exports, particularly textiles
and garments, which grew by 22.6%. While a
major portion of these textiles and garments
reached the USA (41%), a significant quantum
was exported to the
(27%) and other European countries (23%).
Within industrial exports; food, beverages
and tobacco as well as the diamond and
jewellery categories too performed well,
compared to the corresponding period last
year. However YoY growth in many other
sub-sectors, including machinery and
equipment, subsided in November 2008 in view
of the dampened global demand for goods and
Cumulative exports proceeds in 2008 amounted
to US dollars 7,456 million, upto November,
reflecting a 9.7% YoY increase.
Imports which have shown significant
increases in recent months declined by 3.1%
in November 2008 YoY to US$ 977.7 million,
of which over 50% were intermediate goods
comprising textiles, petroleum products and
fertilizers. Reflecting the trends in the
petroleum sector, petroleum products
expenditure decreased by 29.6% in November,
YoY. The substantial increase in fertilizer
imports in November, amounting to US$ 72
million, is largely due to enhanced import
volumes. Consumer goods increased in
November 2008, led by imports of wheat,
which was not imported in the corresponding
month of 2007. Imports of Investment goods
subsided by 28.5% in November 2008, YoY,
mainly due to the contraction in imports of
machinery and equipment and building
materials. Cumulative expenditure on
imports during the first eleven month period
amounted to US dollars 12,960 million, which
reflects a YoY increase of 27.9%.
As a result, the trade deficit contracted
for the first time in 2008, by 22.9% to US$
332.6 million in November 2008. The
cumulative deficit in the trade balance
expanded to US$ 5,504 million during the
first eleven months of the year, compared to
a deficit of US$ 3,338 million for the
corresponding period previous year.
Private remittances which increased during
the period January-November 2008 to US$
2,682 million helped contain the current
account deficit. Consequently gross
official reserves with and without Asian
Clearing Union funds recorded US$ 2,608
million and US$ 2,030 million respectively
by end November 2008, which were sufficient
to finance around 2.2 and 1.7 months of
Beauty & Brains
Nilusha Fonseka (21), the only World Prize
winner in the May 2008 CIMA exam, won the
world prize for Management Accounting
Fonseka is also reading for her Bio Science
degree at Sri Jayewardenepura University.
Hayleys plc on Thursday informed the
resignation of P.S.P.S. Perera from its
Board to the Colombo Stock Exchange.
Our sister paper, The Morning Leader, in its
last week's issue reported that there was a
seeming controversy arising as to whether
Perera had resigned or not from the Hayleys
Business magnate Dhammika Perera who has a
Board seat in the company with a 21% stake
in it, is clamouring for another Board seat,
informed sources said.
Environment Resources Investment plc
recently informed the Colombo Stock Exchange
that it has divested its holdings in Walker
& Greig (Pvt.) Ltd., together with its
assets and liabilities and business dealings
to Brown & Co., plc.
DFCC Bank plc and Hatton National Bank plc (HNB)
which control Acuity Partners (pvt.) Ltd.,
an investment bank, has informed the Colombo
Stock Exchange that they will appoint Ray
Abeywardena as its CEO/Director effective
from next month.
Abeywardena was formerly CEO NDB Stock
In addition, Deva Ellapola, former head of
HNB Stock Brokers will be appointed as head
of stock broking operations, while Amal
Fernando will be operated as Fixed Income
Operations Head from January 15.
Acuity deals in corporate finance, stock
broking and primary dealer business. The
company which operates from T.B. Jayah
Mawatha, Colombo, will operate from
Colombo by the month end (January 2009).
Jayantha Perera will relinquish his position
as Acuity Partners Managing Director and
return to his substantive role as HNB Senior
Deputy General Manager, while being a
non-executive director at Acuity.
Likewise G. Ramanan will assume a role of
non-executive director and revert to his
substantive role of HNB Assistant General
It also said that DFCC and HNB corporate
finance teams with oversight provided by
DFCC Vice President and Acuity non-executive
director Tyrone de Silva will lend their
services to Acuity.
Central Bank has appointed Bank of Ceylon,
Commercial Bank of Ceylon PLC, National
Savings Bank, NatWealth Securities Ltd.,
People's Bank and Sampath Bank to canvass
for investment among the Sri Lankan diaspora
in Treasury Bills (T. Bills) and T. Bonds.
The targeted areas are
Middle East (Dubai,
Abu Dhabi, Kuwait, Jordan, Lebanon, Qatar,
Bahrain, Saudi Arabia and Oman), Europe
(Italy, France, Switzerland, Germany,
Netherlands and UK), North America (USA and
Korea, Malaysia, Singapore, Japan, India and
Bangladesh). In addition, the programme
will cover Australia and New Zealand.
Investments in T. bills or T. bonds could be
channelled through any one of the banks
using the T. bill/bond Investment External
Rupee Account-D (TIERA-D) to be opened by
the investor for that purpose. Remittances
into and out of TIERA-D accounts will be
free from exchange controls.
Asanka Ranathunga (36) recently won the
Fonterra 2008 CEO Award for turning out
machinery for fruit-layered yoghurt
manufacture, which otherwise would have had
cost the local company NZ$ 10,800 to import
He is an employee of Fonterra Lanka.
The private sector business leaders in Sri
Lanka has an opportunity to expand their
businesses to the Maldives, as Maldivian
President Mohamed Nasheed said that his
government has decided to divest all their
Some of those government business concerns
are electricity power supply, highways,
ports and the airport. He said this while
addressing Sri Lankan business leaders in
Tourism Minister Milinda Moragoda will
deliver a keynote speech at the Gujarat
Tourism Convention to be held in Ahamedabad
from January 11-13.
Rs.three mn., in prizes
Ratthi gave away prizes worth Rs. three
million to 90 lucky winners in a promotion
that ended last month.
The winner of the grand prize, Ms. Sonali
Silva from Jaela received gifts worth up to
Fonterra Brands Lanka, the holder of the
Ratthi brand is this multinational company's
largest consumer operation outside of
Australia and New Zealand and is Sri Lanka's
largest FMCG company with 49% of the market,
generating sales of NZ$255 million annually.
Its Anchor brand has 55% market share in its
Recently leaders of the Software and BPO
industry came together to form the unified
national IT/BPO industry association-Sri
Lanka Association for Software and Services
Companies (SLASSCOM)-to lead the advancement
of the IT/BPO industry in Sri Lanka.
"Sri Lanka has the potential to
significantly expand its information
technology enabled services capability, the
formation of SLASSCOM represents a great
opportunity to bring the focus and direction
required to realize this potential," said
Chris Rogers, Managing Director HSBC Global
Services Centre, the largest BPO operation
in Sri Lanka.
Stock market announcements
Ceylon Tea Services has declared a Rs. 25
interim dividend. Excluding dividend (XD)
January 15, 2009
and payment date: January 27.
Union Chemicals Lanka plc has declared a
first interim dividend of Rs. 5 a share. XD
January 12, 2009
and payment date: January 16, 2009.
Environmental Resources Investment plc has
declared a rights issue in the proportion of
1:1 at an issue price of Rs. 20 a share
subject to approval.
Lufthansa buys Austrian
Lufthansa will acquire a 41.6% stake in
Austrian from state holding company OIAG
subject to EC approval. Under the agreement,
the Austrian government would assume up to
euro 500 million of the carrier's debt.
Air France-KLM, which had bid for Austrian
lodged a complaint with the EC saying the
transaction does not follow instructions
imposed on it during the bidding process.
Separately Virgin Atlantic and Lufthansa
held talks about bmi; Lufthansa is
increasing its 30% stake in bmi to 80%.
Also, Lufthansa reportedly resumed talks on
acquiring a stake in SAS which is 50% owned
by the governments of Sweden, Norway and
Denmark. (Washington Aviation Summary)
WB calls for investigation
World Bank (WB) urged the Government to hold
full and transparent investigations of
incidents of violence against media.
Free and independent media is fundamental to
the sustainable economic development of
the WB in a statement said.
The WB expressed grave concern about the
growing incidents of violent attacks on the
including the brutal killings of several
Violence against media has a profoundly
negative impact on the ability of the media
to fulfil its core watchdog function and to
carry out its role as a medium of
accountability and a reflection of "citizen
voice," the statement further said.
Condemnation won't do
Mere words of assurance of investigations
would not be sufficient to restore public
confidence, Ceylon Chamber of Commerce (CCC)
referring to the assassination of The Sunday
Leader Editor Lasantha Wickrematunge said.
Condemning the attack, the CCC said that the
international standing of our nation is at
stake due to the continuous manifestation of
impunity. It reiterated the need for speedy
action by the authorities to bring the
perpetrators before the law to be
appropriately dealt with, to help ensure the
country's economic and social stability and
to safeguard its credibility.
The statement said that they see the killing
as yet another instance of the resurgence of
attacks on media freedom and an alarming
erosion in law and order.
"It is shocking that the attack was carried
out in broad daylight in a populated area
in the outskirts of Colombo," CCC said.
War wins insufficient
The bourse returned its lowest turnover for
the year so far, a sum of Rs.18.5 million,
as the country situation and the global
economic downturn continued to impact on the
local stock exchange at last Friday's
trading, market sources said.
The benchmark ASPI fell 10.15 points and the
more sensitive MPI by 13.13 points over
Thursday's close. "It may however be
temporarily revived for a couple of days if
there is a major military victory, but then
fallback to its status quo of a continuing
bear run afterwards, they said.
Such gains will not be sustainable, the
They further said that though investors were
angry over the killing of The Sunday Leader
editor Lasantha Wickrematunge and the
earlier attack on Maharaja TV, those could
not be construed as having an impact on the
However, the business pages of last week's
The Morning Leader issue quoting senior
banker Rienzie T. Wijetilleke said that
lawlessness negatively impacts business
confidence in the country.
Bad loans create surplus
With rising bad loans being a detriment to
corporate lending, the overnight call money
market, the market with which commercial
banks trade with each other returned a Rs.
6,331 billion net surplus at Friday's
Overnight call rates averaged around 13.63%,
according to the CentralBank.
Shift in focus
State run Bank of Ceylon continued to defend
the rupee vis-…-vis the US dollar at the Rs.
113/85 levels despite sluggish demand, with
the other state owned commercial bank,
People's Bank, being among the buyers at
Friday's trading, market sources said.
"Investor demand is now focused on
government Treasuries rather than in
dollars," they said. (See connected story
found elsewhere on this page)