Commercial Bank officers oppose merger with NDB Bank

Senior officers of Commercial Bank are opposing plans for a merger with NDB Bank saying such a move would affect the corporate culture, staff motivation and industrial harmony at the bank. The Committee of the Executive Officers' Association said in a letter that such a negative impact far outweighs the benefits like size, raising capital adequacy and share structure.

It also said a controversy would erupt over disparities in salary scales of high level management and also Harry Jayawardene’s involvement as a big stakeholder. Both banks have agreed to a merger and details are being worked out but the Association, which opposed business baron Jayawardena’s extended foray in the bank, said:

“It appears that there is no consensus at all on this issue at the corporate management level, without which there is no purpose in proceeding with any negotiations.” The association alleged that the share conversion – in the proposed merger - is done solely based on the Net Asset Values ignoring the impact of any resultant goodwill and pointed out that the report by Asia Securities on the proposed merger indicates that in the merged bank, NDB and Commercial Bank would hold 38.6 percent and 61.4 percent.

“Accordingly, DFCC and other parties connected to Mr. Harry Jayawardena holding 42.6 percent of Commercial Bank and the Goldquest Group (operator of pyramid schemes) that reportedly hold 45 percent of NDB would end-up holding 27.5 percent and '17.28 percent of the merged bank which will still be in violation of the latest direction of Central Bank,” the letter says. While pointing out that the proposed merger would offer an ideal opportunity of regularising the shareholding of the Goldquest Group in NDB which presently remain unregistered, they have said that the possible purchase of the Goldquest stake by Harry Jayawardena and company would increase their shareholdings in the merged bank to 44.8 percent.

“Any possible link with the unsavoury Goldquest group even before talks on a merger would bring Commercial Bank under the intense scrutiny of Anti Money Laundering (AML) regulators, particularly in US and Europe, risking our carefully cultivated international correspondent banking relationships that underpins our trade finance business which garners a substantial part of our profits,” the association said, adding that even if the share swap is worked out on a basis different from the Net Asset Values these risks would largely be the same.