This is an eyewitness report from the NowPublic member Sri Lanka Army news who is in Sri Lanka reporting about this story from the on the ground.
Seylan Bank Problem in Sri Lanka
There is no danger in dealing with the regulated financial sector and Central Bank have taken several steps to build confidence in Seylan Bank by bringing it under Bank of Ceylon, Central Bank Governor Ajith Cabraal said.
He further said "We assure you that they can continue transactions without any danger."
According to the CSE Seylan Share Prices increased by 33%.Normal share prices was 20.50 Rs and now it is 27.00 Rs. Sri Lanka's stock market (CSE) investors have already given a thumbs-up to the regulatory action, and Seylan shares surged LBO said yesterday.
Yesterday 30th Decmber 2008 Central Bank appointed Mr. E Narangoda as the new Chairman of the Seylan Bank and Mr. Nihal Jayamanna,Mr. Lalith Vithana and Mr. Niyomal Gunawardene as the new Board of Directors.
Seylan Bank PLC is a privately owned commercial bank in Sri Lanka brought under Bank of Ceylon (BOC) control since Yesterday 29th December 2008 by order of Central Bank Monetary board. This was taken place under Section 30(1) of the Monetary Law Act No.58 of 1949.Seylan Bank is the Sri Lanka's 2nd largest private commercial bank with Asiaweek placing it among the top 500 Banks in Asia for the past 08 consecutive years. The Bank saddled with bad debt that threatened to destabilize Sri Lanka's financial system was taken over Central Bank of Sri Lanka.
Meanwhile The Monetary Board of the Central Bank wishes to inform the public that they should continue with their normal financial transactions with Seylan Bank PLC and that the Monetary Board assures the public of the safety of deposits and the stability of the financial system.
The Central Bank appointed the government-owned Bank of Ceylon to continue business operations at the troubled Seylan Bank and removed its board of directors.The decision was made because of increased deposit withdrawals and suspected liquidity problems, the Central Bank said.
"The difficulties of Seylan Bank PLC presented a potential danger to the stability of the financial system," the statement said.
Deshamanya Lalith Kotelawala, chairman of Ceylinco Group said last week he would sell his shares to repay investors in failed Golden Key Credit Card Company. Both Seylan Bank and Golden Key are subsidiaries of Ceylinco Group. Kotalawela did not say how much shares he would divest or what amount he is expecting to raise from selling his shares.
But the bank's CEO Ajitha Pasqual was quoted in a newspaper saying "it could be 23-25 percent or even more."
Seylan Bank trouble started as Golden Key Credit Card Company, an unregulated firm in the Ceylinco group got into trouble as the Golden Key Credit Card Company was unable to repay its customers due to its financial instability.
People who were dealing with the bank worried about the financial status of the Seylan bank following the problem with some of the financial institutions in Ceylinco group.The Central Bank said it was "discontinuing the services" of the board of Seylan Bank but retaining the current chief executive officer and employees.
In its press release on the latest development the Seylan Bank said, “what is intended for sale are not the assets of the Seylan Bank, investments made by the bank or any shares owned by Seylan Bank. Further we wish to inform that Seylan Bank will not use the depositors’ funds to meet the obligations to Golden Key Credit card holders.”
The collapse of the Golden Key Company and the Problem of Seylan Bank was the first sign of international financial woes hitting the economy and Financial System in Sri Lanka.Earlier Monetary Board of the Central Bank of Sri Lanka named 6 Person carrying on finance business without authority including Sakvithi Ranasinghe(Sakvithi House Constructions (Pvt) Ltd )and Piyadasa Ratnayake (Danduwam Mudalali).Becasuse of these things Depositors trustworthy towards Financial Institutions has been diminishing and it will lead to a big crisis.
He was Sri Lankan only businessman who had long vision about Sri Lanan Poverty crisis. Ceylinco Gramine Credit Company for the upliftment of families from the bottom up, the poorest of the poor also floated Ceylinco Agricultural Credit Company for agricultural sector assistance. He started even a banking institution to liberate poors from poverty, started a scheme to give seed capital to unemployed graduates who have no access to capital and who have no security to start own businesses. When Tsunami hit Sri Lanka Ceylinco Group helped in many ways for Tsunami victims to start a new life also all insurance claims although none of them were covered for Tsunami could gain claims.
Ceylinco Group is the leading contributor to the society and meet social responsibilities than any other throughout past 60 years.
Seylan Bank PLC is a privately owned commercial bank in Sri Lanka, which is owned by the corporate giant Ceylinco Consolidated. It has branches both in urban as well as rural areas of Sri Lanka. Seylan Bank was incorporated in 28th August 1987 as a Public Limited Liability Company.
Seylan Bank established its first subsidiary, Seylan Merchant Bank Limited, in 1992. A second subsidiary, Ceylinco Seylan Developments Limited, was also established in 1992, primarily for the purpose of constructing the Bank's head office building, Ceylinco Seylan Towers.Seylan bank had 114 banking centres island wide with 3900 staff members in 2007.
Special Thanks :The Associated Press LankaeNews and TNS
Cyber.Alwis Reporting from Colombo