Union Bank to commence Primary Dealer operations

Union Bank of Colombo PLC (UBC) announced that the Bank has been appointed as a Primary Dealer in Government Securities by the Central Bank of Sri Lanka. UBC will commence its business as a Primary Dealer on 01 October, 2014.

As a Primary Dealer, Union Bank will participate directly in Primary Auctions conducted by the Central Bank of Sri Lanka in order to bid for Treasury Bills, Bonds and other Government Securities. Union Bank’s Primary Dealer Unit will also act as an intermediary in Corporate Bonds and Debentures and will assist in developing the secondary market in Corporate Debt in the future.

"The appointment of UBC as a Primary Dealer highlights our commitment to further strengthen our position in the Government Securities markets and assist the Bank to further enhance its portfolio of financial solutions to its customers", stated Isuru Pethiyagoda, Chief Manager - Primary Dealer Unit of UBC. He further stated that it is a privilege to be associated with the Central Bank’s Public Debt Department partnering in raising and distributing Government debt.

As a Primary Dealer, Union Bank will engage, promote and develop a secondary market in Treasury Bill/Bonds and other Government Securities, whilst providing an enhanced platform to attract new customers, markets and businesses. Union Bank also looks forward to introducing new products and services relating to Government Securities in the future with the assistance and support of our regulator, the Public Debt Department.

Union Bank is one of Sri Lanka’s fastest growing Bank’s focusing on the Small and Medium enterprises and retail sectors. Union Bank’s recent investment agreement for $117Mn with TPG a leading global private investment firm with US $ 60 Bn Asset under Management marks a milestone as one of the largest foreign direct investments to Sri Lanka in the recent years. This investment has placed UBC in second place in stated capital amongst Banks in Sri Lanka and within the top five private banks in equity.
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Sinhaputhra exceeds Rs. 5 b deposits

Sinhaputhra Finance PLC has achieved a deposit base of over Rs. 5 billion with certain customer patronage exceeding three decades, indicating trust and confidence; and this was achieved without any expenditure on advertising.

Director Operations Sarliya De Alwis commented that this growth has been based on personal relationships and word-of-mouth influences.

The company’s resilience has been demonstrated by its stability during economic downturns when larger establishments with hasty growth crumbled, leaving distressed depositors. With nearly 6,000 depositors and 7,521 savings accountholders, Sinhaputhra Finance PLC has established itself as a safe haven for depositors.

Sinhaputhra has progressed steadily towards its Rs. 1 billon plus equity position and Rs. 8 billion in total assets. Sinhaputhra’s annual growth has been greater than 30% on average in its 35 years of operations. This position has been achieved with a long-term focus on customers.

The lower rates offered by banks has created extremely high levels of excess liquidity in Registered Finance Companies, causing lower returns for depositors, yet Sinhaputhra Finance PLC is mindful that such times do not exist forever, and has focused on retaining its loyal and long-standing customers.

Managing Director Ravana Wijeyeratne stated that even though bank loans are now offered at extremely low rates at 200 basis points below average rates paid to depositors, Sinhaputhra’s commitment to depositors and their lowering monthly revenues compels the Sinhaputhra team to offer the best rates they can.
www.ft.lk

Nimal buys control of Mercantile Produce Brokers for Rs. 200 m

High net worth investor Nimal Perera yesterday bought control of well-established Mercantile Produce Brokers Ltd., (MPB) for Rs. 200 million.

The investment is on his personal capacity through his investment arm Don Wilbert Capital and marks his biggest personal move to date.

Nimal acquired the 76% stake from senior management of MPB who sold out and signalled an emphatic move towards produce broking in Sri Lanka. Those who sold out include MPB Chairman Sunil Udalagama, Managing Director Naresh Dhambawinna and CFO A.A.G. Vitharana.

MPB is among the top five produce brokers in the country with a strong clientele whilst it has one of the most modern warehouses in the country at Kadawatha.

Don Wilbert Capital has a subsidiary N Capital, which invested in Tangalle Bay Resorts.Analysts described Nimal’s move as a strategic investment marking his own moves and signals a major foray into produce broking. Through Royal Ceramics Plc, in which he is Managing Director, he dabbled in the produce broking industry temporarily through the acquisition of Asia Siyaka Commodities which was subsequently sold to Lanka Commodities Ltd.

Analysts speculated that with Nimal’s connection to Hayleys plantation business (he serves on the Board of Hayleys Plc) as well as Horana Plantations through Lanka Ceramics Plc, which RCL is the controlling shareholder of, MPB will have captive business.

Following the acquisition, Nimal has appointed two nominees to the MPB Board – Nishantha Wickremsinghe who hails from James Finlays and is currently Chairman of SriLankan Airlines as well as Royal Ceramics CFO Haresh Somashantha. MPB Director Samantha Dombanwela will be the new CEO.
www.ft.lk

Bourse suffers net outflows of Rs 4.4B

By Paneetha Ameresekere

Ceylon Finance Today: The carnage in the bourse continued for the third consecutive day yesterday (30), led by JKH, with an overall net foreign outflow (NFO) of Rs 1.8 billion in the market, taking NFOs in those three days......up to yesterday to Rs 4.4 billion, data showed.

Nevertheless, market sources told Ceylon FT that those net outflows were only on JKH. On the other hand there are also inflows, they said. The bourse in the year-to-date has experienced a net foreign inflow of Rs 7.2 billion.

JKH, the market's largest capitalized stock, also boosted turnover to Rs 4.3 billion yesterday, while CTC, the market's second largest capitalized stock, on nominal volumes, helped the bourse to make marginal gains at yesterday's trading, data further showed.

JKH and its warrants contributed Rs 2.3 billion to the day's turnover, while the ASPI marginally increased by 0.19% to 7,252.14 points and the S&P SL 20 Index by 0.48% to 4,038.30 points. Those gains were backed by CTC's share price increasing by 0.19% to
Rs 1,155 a share whilst contributing a nominal Rs 12,700 to turnover on a measly share volume of 11.

The performance of market indices are directly correlated to the movement of market capitalization (market cap). CTC, which exposure to overall market cap yesterday was 7.45%, has a heavy bearing on the movement of such indices.

Losers out bid gainers by a ratio of 106:100 yesterday. JKH contributed Rs 2 billion to yesterday's turnover on a share volume (SV) of 7.9 million. Its shares closed, up 1.08% to
Rs 253.70 a share. JKH's contribution to overall market cap yesterday was 8.66%.

The market witnessed a SV of 86,867,537; up 8.1% over the previous day's SV.
Among the other stocks which joined the Rs 100 million+ club yesterday were Com Bank, the market's third largest capitalized stock with Rs 368 million, on a SV of 2.4 million. 

Com Bank's shares closed at Rs 155.90 a share, down 0.70%. Its contribution to overall market cap was 4.35%.

Third was Chevron, the market's 17th largest capitalized stock with Rs 171.9 million on a SV of 513,074. Chevron, the market's 17th largest capitalized stock, closed at Rs 335.80 a share, up 0.45%.

Fourth, JKH Warrants (W) 0023, Rs 149.1 million and up, 2.56% to Rs 80 in price. However, 'Ws' are not considered for market cap. And the last in the Rs 100 million club was JKH W0022 (Rs 117.5 million), up 2.30% to Rs 75.50. 
www.ceylontoday.lk

HNB to acquire Prime Grameen

Ceylon Finance Today: Hatton National Bank PLC (HNB) yesterday (30)entered into a shareholders' agreement to purchase a 51% stake in Prime Grameen Micro Finance Ltd. The bank told the Colombo Stock Exchange that the deal would go through on or before 31 October.

www.ceylontoday.lk

Financial Sector Consolidation Update - September 2014

During September 2014, the Monetary Board approved, in-principle, another 8 consolidation proposals submitted by banks and Non-Bank Financial Institutions (NBFIs), thus bringing the total number of proposals approved so far to 37. At the same time, consolidation plans of another 4 banks and 4 NBFIs are also being finalized, and are due to be announced in the near future.

The work relating to the mergers/acquisitions that have already commenced continued to progress, with the respective banks and NBFIs working towards the timelines set at the beginning of the year.

The Central Bank held a further round of discussions with selected NBFIs with a view to resolving pending issues on their respective consolidation processes, and at these meetings, necessary guidance was provided for the facilitation of the implementation of the respective merger plans.

In the meantime, the Central Bank’s Internal Committees also reviewed the current regulatory framework for banks and NBFIs with a view to further strengthening financial system stability in the post-consolidation period.
http://www.cbsl.gov.lk/pics_n_docs/latest_news/press_20140930eb.pdf

Sri Lanka stocks close up 0.2-pct

Sep 30, 2014 (LBO) - Sri Lanka's stocks closed 0.19 percent higher with conglomerate John Keells Holdings gaining despite continued strong foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 13.98 points higher at 7,252.14, up 0.19 percent. The S&P SL20 closed 19.30 points higher at 4,038.30, up 0.48 percent.

Turnover was 4.29 billion rupees, up from 3.46 billion rupees a day earlier with 91 stocks closed positive against 98 negative.

John Keells Holdings closed 2.70 rupees higher at 253.70 rupees with seventeen off-market transactions of 211.18 million rupees contributing 5 percent of the turnover.

JKH also had market transactions of 1.77 billion rupees contributing 41 percent of the daily turnover.

Commercial Bank of Ceylon closed 1.10 rupees lower at 155.90 rupees with an off-market transaction of 204.16 million rupees changing hands at 156.00 rupees per share contributing 5 percent of the turnover.

The aggregate value of all off-the-floor deals represented 30 percent of the daily turnover.

Dunamis Capital closed 1.40 rupees lower at 37.50 rupees and Janashakthi Insurance closed 40 cents lower at 23.70 rupees, attracting most number of trades during the day.

Foreign investors bought 1.23 billion rupees worth shares while selling 3.01 billion rupees worth shares.

Index heavy John Keells Holdings contributed most to the index gain.

Dialog Axiata closed 20 cents higher at 11.50 rupees and HNB closed 4.40 rupees higher at 190.40 rupees.