Business Times

Union Bank takes over finance company, F&G

By Bandula Sirimanna

The Union Bank of Colombo is taking a controlling interest in The Finance & Guarantee Ltd (F&G) by acquiring a majority stake in the company, the Colombo Stock Exchange was informed on Tuesday.
The bank said it was investing Rs 600 million in the former Ceylinco Group finance company and has been given approval by the Monetary Board of the Central Bank.

F&G is being managed by the Merchant Bank of Sri Lanka. The company has around 3000 depositors with a total deposit base of around Rs. 3.3 billion. In a statement to the media, Union Bank Chairman Aijta de Zoysa stated that the bank together with ShoreCap II Ltd (SCII) USA, will invest in excess of Rs 1.1 billion to recapitalize F&G. He further stated that the acquisition is part of Union Bank’s diversification and expansion plan to increase focus and growth in the SME sector and it earmarks yet another stepping stone to further penetrate the Small enterprises segment.

Anil Amarasuriya Director/CEO of UBC said that the new look company with the backing of Union Bank will be able to restore public confidence in the troubled firm. Several depositors told the Business Times that F&G is delaying paying the due interest of depositors while failing to refund the capital of many depositors on maturity claiming a cash flow problem.

It has caused unbearable economic hardships for a large number of depositors including senior citizens and retired officials who solely depend on interest income, they said. In response, Chief Executive Officer of the F&G Dulip Ranasinghe noted, “the company has paid the due interest payments up to December and since then it has been unable to make any payments as it has no business. A sum of Rs.1.5 billion has been paid as interest payments for depositors during the last two and half years only from loan recoveries.”

The F&G is also planning to convert 60% of its deposit liability to ordinary shares of the company while Rs. 1.4 billion worth deposits has already been converted to ordinary shares, he said. The company is also planning to raise Rs. 300 million from a strategic investor and a further Rs.100 million loan facility from the Central Bank (CB) under its Stimulus Package for failed finance companies.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
 
Other Business Times Articles
Sri Lanka loses race in hedging payments
Elephants could stall C’Wealth Games bid
Chinese firm clinches SLT and Mobitel expansion deals
Sri Lankan entrepreneur wins Queen's award
Tourists increase by 19.9% in June
Rs.1.7 bln investment in Kalutara hotel
Regional development takes off
COMMENT -Losing round one in hedging scam
Going ‘beyond the title’
What you should know about one-way traffic systems
Sri Lanka’s tea industry faces a threat of collapse amidst workers wage hike
Amana Global MoU with Islamic Banking and Finance Institute, Malaysia
IBSL confirms Ceylinco Life as country’s top life insurer
ODEL hires top global retail management expert as new COO
Microsoft launches 'Sharepoint Saturday' in SL
Mobile is the next big thing for digital: Neo@Ogilvy APAC President
Dialog Axiata in JV with Multinet Pakistan to provide Global Connectivity Services
Losing a major battle in a British Court
Hambantota gets down to business
Fast-growing Softlogic acquires Asia Capital
Commercial Factors reaches Rs. 3 bln portfolio milestone
Top surfers to ride A-Bay waves at SriLankan Airlines Pro Surf
Sri Lanka hosts major international conference on building resilience to disasters
Western Province share of national GDP falling: CB
Bharti Airtel announces new organisation structure for its India and South Asia operations
Carbon firm launches consultancy services with Vallibel Power
Pioneer DNA-testing company, Genetech wins ISO accreditation of its lab
Brandix supports Moratuwa University’s research work with Rs. 5 million grant
Special concessions to Shangri-La not wrong
Indo-Lanka ferry service drawing many travellers
Hotel boom attracts US$1.1 mln investment
Visiting Jaffna anyone?
Surprise, shock then relief over Softlogic trading
Union Bank takes over finance company, F&G
Oil hedging deals – Exercise of the Judicial Power of the people ?

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2011 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution