Central Bank to increase single shareholder limit of banks
Increasing the single shareholder limit of banks is being actively considered by the Central Bank (CB), keeping in line with the 6-month road map for ensuring macroeconomic and financial system stability.
“Share ownership rules will be reviewed this year, as stated in the road map, by the new Governor, Nivard Cabraal,” a CB official told the Business Times on Wednesday.
According to Central Bank (CB) regulations, one party or parties acting in concert can own up to 10 per cent of a bank. This can be extended up to 15 per cent with CB’s special approval. The plan is to increase each limit by 5 per cent more, according to the official. So, the 10 per cent limit will go up to 15 per cent with this special approval increasing up to 20 per cent.
This came after many shareholders in banks over the years had appealed to the CB to ‘reconsider’ the rules on a single shareholder limit. Most such shareholders were supposed to sell their excess stakes some time ago but had appealed to extend the timeline as the share market wasn’t performing well.
“This was pending for about four years,” a senior banker said explaining that this was on the cards since the last government took office.
LOLC has around 25 per cent of voting shares in Seylan Bank and 44 per cent of non-voting and JKH has 30 per cent of voting shares in NTB and 50 per cent of non-voting. The US-based global private investment firm TPG’s investment through its affiliate Culture Financial Holdings Ltd bought a 70 per cent stake in Union Bank (UB) in 2014 for US$.117 million.
In 2017 Amana Bank PLC got special permission for the bank’s fourth-largest shareholder— Islamic Development Bank to own up to 29.99 per cent of the voting shares by acting in concert with IB Growth Fund (Labuan) LLP.