Buying other finance companies in CB plan
The Commercial Bank of Ceylon has purchased Indra Finance, an unheard of private finance company, as per Central Bank consolidation plans for a whopping Rs. 870 million, according to a company media release.
This company is not even heard of in the market. What is the market share?
What an investment from the best bank! Was a proper evaluation done to identify the hidden demons in the company? The company owners must be laughing all the way to the bank to deposit the money. The bank says in a press release they can now serve another group of customers. Are they implying they cannot lend anymore to their existing customers with their large branch network in the country? What is the great hurry for the bank to be one of the first to purchase an unknown finance company? Was there a deal somewhere? This country is going down the road of no return. Dozens of finance company licences were issued during the last 10 years and those owners are having a field day selling them to banks at twice the book values. In a properly governed country those directors would have been prosecuted for squandering public deposits. Commercial Bank is committing Hara Kiri in public. Given the public sentiment about the influence in the bank the CEO needs to explain the objectives of purchasing an unknown finance company? The Commercial Bank is a public listed company and takes public deposits. The public has right to know about all the facts of this transaction. This governance should also apply to all publicly-listed banks and finance companies buying out other firms under the Central Bank consolidation plan.
P. Wassula
Colombo