Business Times

Controversial NSB-TFC deal to be reversed this week

By Duruthu Edirimuni Chandrasekera

The controversial 390 million-rupee deal between some investors/directors at The Finance Co (TFC) and state-owned National Savings Bank (NSB) is set to be reversed this week, informed sources said.
This follows a meeting the Securities and Exchange Commission (SEC) has had with directors of Taprobane Securities, on Thursday, Tushara Jayaratne, Assistant Director External Relations, SEC told the Business Times. “Currently we are discussing with the broker concerned on how to resolve this issue. Nothing (concrete) has been decided up to now,” he added.

The sources said that Fitch Ratings, which last September affirmed its long term AAA Fitch Ratings for the 9th consecutive year, was also reviewing the developments in the context of the new risk element faced by the bank. However Fitch officials declined to comment other than say they are waiting for further developments next week.

Two of the sellers Dinal Wijemanne and ABC Radio Group chairman Raynor Silva are directors of TFC. Mr Wijemanne is also CEO of Taprobane Securities which was both the buying and selling broker of the 13 % stake which has triggered a major row as NSB bought it at a premium – Rs 50 per share against the market price of Rs 30-31 per share.

With the heat on and the President ordering the NSB to cancel the transaction, the sources said that the four sellers of the TFC’s 13% have agreed to buy back the share at the same Rs 50 per share price. High networth investor Yoga Perera, a well-known motor car dealer and his brother were the other two sellers. Anura Fernando, a former tea trader and independent director at TFC, also sold shares later.
“They have made an application to the SEC for sanction to buy back the shares from NSB and they are awaiting a response,” a source told the Business Times. He said that the SEC will explain whether it will be an on or off-the-floor transaction once they grant approval for the buy back.

SEC has also launched a probe into possible insider dealing in the transaction and SEC officials on May 4 visited the premises of Taprobane Securities and took into possession some documents and data relating to their investigations, Mr Jayaratne said.

While the loss-making deal has been slammed by many sections of the market, traders accused the settlement bank, Sampath Bank, of delaying payments to Taprobane Securities over other transactions.
“In one instance, Rs 50 million cash owed to Taprobane Securities (as a seller of stock) was delayed by Sampath probably hoping to recover the Rs 390 million through such an exercise,” one source said. Sampath Bank is yet to receive the Rs 390 million from the NSB.

An advertisement by the NSB on Thursday that ran on all newspapers explaining the role of the bank in the transaction raised more questions than clearing the air over the deal. The same statement was uploaded on NSB’s intranet for all staff to access. Bank branches have been fielding many questions on credibility issues by depositors and the security of their deposits.

The statement said: “The bank received an invitation from a stock broker to purchase voting shares in March 2012. Since the bank had already carried out a detailed analysis in January 2011, the Board Sub-committee on Corporate Lending and Equity Investment decided to re-look at the investment from a strategic initiative point of view with further analysis. Having done a further analysis a favourable consideration was given to purchase voting shares of TFC amounting to 10%-15%.

However, since the Board was of the view that benefits of this investment is not as strong enough to proceed with, a decision was taken not to make the payment, due on this transaction.”

Traders asked why the committee or the board didn’t make this assessment before deciding to go ahead with the transaction and then suspending payment. “This creates serious problem in the market because anyone can take a decision to buy and just before payment is due, say they are not interested. The other question is why Sampath Bank settled the sellers without waiting for the custodian bank to settle,” one trader asked.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
 
Other Business Times Articles
Controversial NSB-TFC deal to be reversed this week
India’s ITC now finalises deal, Sheraton moves to Kollupitiya
Tug of war between Treasury and BOI hinders US$2 billion FDI target
SriLankan mulling over air taxi operations
EDB fracas continues, meets COPE on June 8
Comment - Lynch the culprits
Sri Lanka has one of the best tourism products in the world
President must act to nab and expose fraudsters
PBJ opposed to multi-tea blending proposals
German cruise liner aims to bring 4,000 visitors in Dec-March
Gearing the Colombo bourse for growth
Discussion on 'what happens in boardrooms"
Citrus Leisure appoints two new directors to its board
Senseless action by SL Govt. to permit duty-free imports of luxury yachts
Exports of accounting could exceed IT : SLASSCOM
Fitch assigns an "A (lka)" Rating for Sampath Leasing and Factoring Ltd
Emirates Group announces 24th consecutive year of profit
Vista Advertising bags top HP Award
Singer Finance net profit grows by 106% in 4th quarter
99X Technology wins' Arch of Europe' Gold Award for Quality and Technology
Union Assurance insurance premium details thro’ SMS
Etisalat and education
Baurs Healthcare unit annual convention
UNIDO tests hydrogen energy entry in Sri Lanka
Allegations against pharma
Lovell takes over as Union Bank's head honcho
Learning from mistakes is hard work
Sri Lanka slip-sliding on economic targets
Haycarb sales up at Rs 8.5 bln, pre-tax Rs 724 mln in 2011/12
Japanese funding for Balapitiya resort hotel
Cinnamon Lakeside Colombo listed as 'Most Valued Hospitality Brand'
Urgent need to improve Balance of Payments
Gulf Air ranked ‘Best Family Friendly Airline’ once again
Senior Minister urges taking advantage of Euro zone crisis
Amitha Gooneratne joins DCSL Group as the MD of Melstacorp Ltd
ComBank to link its ATMs to China UnionPay
DFCC Vardhana Bank's profits up
Thomas Cook Holidays returns to Sri Lanka through Sparklink
Nine respond to Trinco RFPs

 

 
Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 1996 - 2012 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved | Site best viewed in IE ver 8.0 @ 1024 x 768 resolution