Several bank heads resign, some likely to challenge Finance Ministry order

Following the resignations of Dr. Rani Jayamaha as Chairperson of Hatton National Bank and Sunil Wijesinha as National Development Bank PLC Chairman and the likelihood of more such resignations, very reliable sources indicated that the Finance Ministry has notified several private commercial bank heads who had been appointed to represent government owned shares to step down.

The government owns nearly 33 per cent of shares in the Hatton National Bank and 28 per cent in the National Development Bank.
www.adadeana.lk

Sri Lanka to ease rules to draw more foreign investment: Ravi

COLOMBO (EconomyNext) - Sri Lanka's new government will loosen regulations to attract more foreign investment, Finance Minister Ravi Karunanayake has said.

Almost three decades of civil war and years of misrule, meant that “Sri Lanka missed the opportunity to be to India what Hong Kong is to China,” he said in his keynote address to the Asian Investment Conference organised by Credit Suisse at session moderated by Sharhan Mushin, who is head of financial institutions group for the Asia Pacific region, which covers Sri Lanka.

The forum draws institutional and hedge fund investors as well as high-net-worth individuals and business leaders who seek access to influential ideas and actionable advice.

Karunanayake said the new government is keen to attract foreign investment to stimulate export-led growth and help alleviate poverty.

The government intends to revise investment rules to attract overseas flows and strengthen trading relationships with other nations through free trade deals planned with China and the U.S. adding to existing ones with India and Pakistan.

Karunanayake acknowledged that the external account is a problem.

With almost half the country’s public borrowing denominated in foreign currencies, Karunanayake said he favours a stronger rupee to reduce debt servicing costs.

However, since a stronger currency penalizes exporters, the solution, he said, is to ease barriers of entry for foreign investment which would raise skill levels and efficiency.

Karunanayake forecasts economic growth this year of 7-7.5 percent driven by sectors like tourism, agriculture and petroleum.

He identified logistics, infrastructure and housing as sectors that need more attention.
 

Sri Lankan shares fall for 5th session on margin calls, political woes

(Reuters) - Sri Lankan shares fell for a fifth straight session on Friday and closed at their lowest in nearly eight months as investors sold their stocks to settle margin trading ahead of quarter-end, while political worries also weighed on sentiment.

The main stock index ended 0.71 percent, or 49.31 points, weaker at 6,873.52, its lowest close since Aug. 6 and further moving away from the key psychological support level of 7,000. It has lost 6.07 percent in the past 20 sessions.

"The market fell across the board due to margin calls and month-end settlement selling pressure," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Analysts expect the next support level at 6,800.

Shares of the country's top mobile phone operator, Dialog Axiata Plc, fell 0.92 percent, while conglomerate John Keells Holdings Plc dropped 0.69 percent.

Shares of the country's biggest listed lender, Commercial Bank of Ceylon Plc, fell 0.71 percent.

The day's turnover was 447 million rupees ($8.28 million), less than half of this year's daily average of 1.21 billion rupees.

Foreign investors sold a net 91.5 million rupees worth of shares. But they have been net buyers of 3.12 billion rupees so far this year.

Analysts said concerns that the government's decision-making process would slow down, also weighed on sentiment after President Maithripala Sirisena formed a national government incorporating the main opposition party in a bid to push through reforms and preserve political stability.

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Vallibel Finance debentures oversubscribed

Vallibel Finance PLC announced yesterday that applications for the debenture issue worth Rs. 750,000,000 (7.5 million) have been oversubscribed and closed. The company is on the works to issue further debentures.

Vallibel Finance planned to raise Rs.1 Billion via the issuance of a listed debenture. The company issued 7.5 million Rated, Guaranteed (Capital and two interest installments) Subordinated, Redeemable debentures at Rs.100 each with an option to issue a further 2.5 million debentures in the event of oversubscription.

Financial advisors and managers to the issue is Acuity Partners (Private) Limited. Vallibel Finance was rebranded in 2005 after their acquisition by Vallibel Group and was backed by the prestige of their parent holding group, Vallibel Finance PLC. Vallibel Finance has followed an aggressive expansion strategy in 2011 and in time, the company was ranked amongst the top 50 most respected entities in the country by LMD in its 2014 survey. (SP)
www.dailynews.lk

Govt. probing previous regime's CB investments in EPF

By Ravi Ladduwahetty

Ceylon Finance Today: The Government is currently probing the transaction of the Central Bank's investments Employees Provident Fund in the Colombo Stock Exchange.
"All these transactions are heavy probe in a true spirit of transparency and good governance and we are determined to complete the findings within these 100 days," top official and political sources told Ceylon FT yesterday.

A cloud of controversy was looming over these transactions of the previous regime which also prompted the Auditor General also to comment on these transactions.
We are committed to transparency and we have given directions to the Central bank to give the maximum returns to the EPF members, whose lifetime earnings are in the fund, the sources said.

The probe also revolves round how the EPF Funds went into the shares which were making thumping losses and at present investments were being made into shares which were prone to risks, they said, adding that the investments were continued to be made into the stock market even under the present regime as well. "There has not been any directives to us not to invest EPF Funds in the CSE, Central Bank sources said

They said that investments were being made into the Treasury Bills and Treasury Bonds as well but brokers said that they were not given clear directives on what stocks to invest the EPF funds.

However, other sources said that it was conflict of interest for the Central Bank to invest EPF funds in banking stocks when the CB was expected to regulate the banks themselves!
www.ceylontoday.lk

Sri Lankan shares fall for 4th session on margin calls, political woes

(Reuters) - Sri Lankan shares fell for a fourth straight session on Thursday and closed at their lowest in more than seven months as investors sold stakes to settle margin trading ahead of quarter-end, while political uncertainty also weighed on sentiment.

The main stock index ended 0.72 percent, or 50.20 points, weaker at 6,922.83, its lowest close since Aug. 8 and further moving away from the key psychological support level of 7,000. It has lost 5.39 percent in the past 19 sessions.

"The trend will continue until there is political uncertainty. We see the next resistance level at 6,800," a stockbroker said on condition of anonymity.

Analysts said concerns that the government's decision-making process would slow down, also weighed on sentiment after President Maithripala Sirisena formed a national government incorporating the main opposition party in a bid to push through reforms and preserve political stability.

The market also shrugged off a fall in t-bill yields at a weekly auction on Wednesday, brokers said.

Yields on t-bills fell between 17 and 19 basis points, after they dropped 31 to 44 bps last week.

The central bank said on March 18 that the low-interest rate environment was expected to continue benefiting from lower inflation while keeping policy rates steady.

Shares of the country's biggest listed lender, Commercial Bank of Ceylon Plc, fell 2.27 percent, while Ceylon Brewery Plc dropped 22.12 percent, the biggest single-day drop since May 31, 2012. Conglomerate John Keells Holdings Plc fell 1.27 percent.

The day's turnover was 1.1 billion rupees ($8.28 million), lower than this year's daily average of 1.22 billion rupees.

Foreign investors sold a net 210.5 million rupees worth of shares. But they have been net buyers of 3.12 billion rupees so far this year. 

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Softlogic Finance rights oversubscribed ‘with strong investor interest’

The recent Rights Issue of Softlogic Finance PLC was over-subscribed by over 150% with the new equity infusion of Rs 401 million, boosting the Total Equity position of the Company to Rs 1.9 billion.

The Rights Issue, in which 10 Ordinary Shares were issued at Rs 30 per share for every 28 Ordinary Shares held by shareholders as at February 26, attracted applications for over 20.1 million shares – with over-subscriptions exceeding 6.7 million shares. Applications for 13,376,411 shares at Rs 30 each were accepted by the company and applications were closed on March 16.

In addition to expanding the capital base of Softlogic Finance PLC the Equity infusion is required to facilitate the high growth trajectory of the Company, that has seen its Total Assets increase to Rs 20 billion, an increase of over 10X times within 4 ½ years, compared to an Asset position of Rs 1.8 billion when the Softlogic Group acquired the company. The issue is expected to enhance the capital structure and facilitate the aggressive business plans of the company.

The capital infusion comes at an opportune time with demand for credit by the private sector showing notable increases on the back of reduction of interest rates to multi-year lows, the company said. "Softlogic Finance PLC is greatly pleased at the resounding demonstration of confidence in the company and endorsement of its strategy, by both existing shareholders as well as new investors, especially at a time of bearish sentiment in the stock market," Softlogic Finance PLC Chairman, Ashok Pathirage said. "The capital infusion will add significant further impetus to Softlogic Finance’s journey to achieving its vision of becoming the preferred non-banking financial institution in Sri Lanka."
www.island.lk