DFCC – NDB merger in the balance
View(s):The much-talked of DFCC – NDB merger is in the balance with the two banks awaiting direction from the regulator in the new government structure, officials of both entities said.
“We have done a lot of groundwork towards consolidation, but we didn’t go to the shareholders as yet. We are awaiting more clarity and direction from the (new) authorities,” a DFCC official told the Business Times.
An NDB official concurred, saying that they will also await Central Bank’s (CB) direction in this regard.
He said that the CB was promoting ‘consolidation, but both entities had to go to the shareholders for the final go ahead before a merger was done. Both banks were gearing towards this when the regime change happened.
The government through different entities own over 30 per cent in both DFCC and NDB. The new regime is more flexible towards DFCC – NDB merger.
“Consolidation of banks as a principle we are not opposed to, but it shouldn’t be coerced by government. It should be a free decision of shareholders,” Eran Wickramaratne, Deputy Minister Highways and Investment Promotion and a former NDB CEO, told the Business Times, reiterating that consolidation shouldn’t be an arranged marriage.
The NDB and DFCC are in advanced stages over a merger and during the previous regime it was ‘assumed’ that this merger can be done rightly or wrongly, according to an industry expert.