Sri Lanka’s Dialog to curb loan portfolio, deposits of Colombo Trust Finance

ECONOMYNEXT – Sri Lankan celco Dialog Axiata said it will retain all employees of Colombo Trust Finance, a finance company it acquired, and increase its core capital but restructure its loan portfolio and deposits.

Dialog Axiata last month bought a controlling stake in Colombo Trust Finance PLC from the Cargills group for just over a billion rupees, in a foray into financial services.

According to the Mandatory Offer document by Dialog Axiata for Colombo Trust Finance (CTF), it sees the acquisition as expanding Dialog’s scope of operations into digital financial services (DFS).

“Dialog intends to continue operations of CTF as a standalone business providing financial services managed independently under the guidance of senior management appointed by Dialog,” it said.

Dialog said expects to use the existing fixed assets of CTF and where required make investments in technology to facilitate business operations under DFS.

However, Dialog said it does not intend to continue with the existing product portfolio offered by CTF and plans to “significantly curtail and restructure the existing loan portfolio and deposits.”

Dialog said it will retain all employees of CTF and increase core capital of CTF in terms of the finance business act direction No. 2 of 2017 which requires finance companies to raise core capital to Rs400 million by December 2017 and Rs1 billion by January 2018.

Fraud hit Sri Lanka gilt dealer Entrust reveals Rs11bn scam

ECONOMYNEXT - Sri Lanka's Entrust Securities, a primary dealer in government securities embroiled in a fraud has revealed an 11 billion rupee hole in its balance sheet by June 2017, which is growing at the rate of 200 million rupees a quarter with new losses.

Entrust Securities Plc in unaudited accounts filed with the Colombo Stock Exchange said it had assets of just 753 million rupees and liabilities of 12.34 billion rupees, leaving 11.58 rupees unaccounted for.

The firms March 2015 accounts audited by Price WaterHouse Coopers showed assets of 17.3 billion rupees.

As late at June 2016, Entrust reported assets of 16.4 billion rupees and profits of 95 million rupees, when reporting paused.

The June 2017 accounts shows losses of 223 million rupees and an 11.5 billion rupee hole in the balance sheet.

The March 2017 accounts filed at the Colombo Stock Exchange which was also just filed shows a loss of 197 million for the quarter and an 11.3 billion rupee loss recognized last year.

The firm had taken money from large investors and several state pension funds including a central bank backed against government bonds, but sold the bonds to third parties.

Entrust was put under the administration of National Savings Bank by the central bank in 2016 and top officials were later arrested by police.

A government minister told parliament that Entrust had funded the Carlton Rugby Tournament connected to ex-President Rajapaksa's son Namal with millions of rupees.

It owned the Western Warriors club, whose Captain was Yoshitha Rajapaksa, who was brought from an auction paying 11 million rupees, Minister Kabir Hashim told parliament.

He said the central bank had not taken any action during the Rajapaksa regime despite on-site investigations by examiners showing money was missing.