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NTB
staff gets shares via IFC It is the first time in Sri Lanka that staff at a bank or private company would be owners in the institution they are working in. This step is in line with IFC thinking to move out of projects that are well managed and also promote share ownership among a larger section of the population, according to IFC's country coordinator Sanjiva Senanayake. "NTB is
a well managed bank and doesn't need our input anymore. So when
the rights offer came along we thought we could offer it to the
staff to enable them to become part-owners of the bank," he
said. IFC has a 15 percent stake in NTB. Senanayake said that NTB staff is expected to take upto 1.5 million shares of IFC's entitlement of some 5 million shares. The balance would be offered to a reputed international investor, the IFC official said. Maxi Prelis, NTB's Director/CEO, said the bank's 300-plus staff including trainees have all expressed an interest in buying into the rights issues and would do so with their own funds without loans or other support from the bank. "It is purely voluntary and out of their own interest. Even the trainees are keen to buy shares," he said adding that this was a good signal to the market in the march towards a share-owning democracy. Prelis said staff members have expressed an interest in buying parcels of between 100 shares to 200,000 shares per individual. He said the bank has done well in recent years with its non-performing loans (NPL) ratio at less than six percent compared to the 10-12 percent average in the banking sector. The NTB CEO also rejected a perception in the market that banks were making huge profits during good times and bad times in the economy. "In our case our spread is small and rates attractive. We have also managed our NPLs well. On the other hand much of our profits come from fee-based income and treasury operations." The bank performed extremely well in the first quarter of the current year with the total business turnover growing to Rs. 548 million compared to Rs. 167 million in the first quarter of 2002. Deposits have reached Rs. 5.3 billion and with the acquisition of Waldock Mackenzie in 2002, the asset base has increased to Rs. 16.6 billion. The steady growth in business volumes has yielded a net profit of Rs 83.4 million for the quarter. NTB, which has the exclusive franchise for the American Express charge card, is planning to introduce it into the market in July to the middle and upper segments of society. It would be the third card in the market after Masters and Visa. Commercial
banking licence for Islamic banks under new Act Amana Investments Ltd (AIL), one of the pioneering Islamic banking institutions in Sri Lanka, hopes to widen its branch network and increase its product range in the future, according to A.I. Marikar, Managing Director of AIL. It now has branches in Pettah, Kandy and Kattankudy in the east. The average Islamic finance market size in Sri Lanka, based on the extent of their transactions with the public, could be around Rs. 25-30 billion. Amana Investments will also issue credit cards once the banking licence is given. AIL also plans to help Malawi to set up an Islamic bank and has also received inquiries seeking support from South Africa and the Maldives. AIL, which has nearly 9,000 customers and deposits of over Rs. 1.6 billion, presently enjoys the status of a merchant bank. It accepts deposits but does not pay interest. Merchant banks do not need a specific licence to function nor do they need to maintain a reserve in the Central Bank. Islamic banking institutions worldwide grew 20 percent last year, helped by interest rate fluctuations which encouraged many to move out of fixed interest rate investments to equity financing. "This is due to the unstable environment in interest bearing instruments," said Afzal Yusuf, Assistant General Manager, AIL. "Today there is massive interest rate volatility. Even in Sri Lanka the fixed deposit interest rates are fluctuating." He said Islamic banks operate on the basis of equity funding, in which customers are considered to be shareholders, and not just depositors. "Islamic banking has been growing phenomenally worldwide and there's enormous potential for it to grow further," said Marikar. There have been many inquiries from fund managers overseas about the status of Islamic banking in Sri Lanka. "They want to spread their risks. They don't want to have all their eggs in one basket," said Marikar. People are moving out of conventional banking because Islamic banking seems to be more attractive as it is based on profit and loss sharing while fulfilling the ethical obligations of Muslims. Several Arab nations are moving away from USA and Europe following the Western campaign against terrorism and attacks against Arab states such as Iraq. These funds are now being attracted by Islamic banks in Far Eastern countries like Malaysia. "There
is great potential for the sector to grow. There's a large amount
of ethical funds available in the Middle-Eastern markets and several
other markets. With countries like India, Pakistan and Bangladesh
still not developed into established markets of Islamic banking,
Sri Lanka has an edge over them," Marikar said. "With AIL's links with Bank Islam Malaysia and Takaful Malaysia, Sri Lanka could become a hub to launch Islamic banking into neighbouring countries which have large Muslim populations," Marikar said. The trend all
over the world is now towards more profit and loss sharing investments. AIL made a post-tax
profit of Rs. 10 million for the period 2001/2002. There were doubts whether the Sri Lankan market would accept the new concept. Therefore, the Central Bank agreed to let AIL function as a merchant bank. Four years ago the Central Bank carried out an extensive audit on AIL, which confirmed that Amana was fulfilling all requirements and was well within the parameters set by the Central Bank.
He said ACCA continues to be a world leader in social and environmental accounting, auditing and reporting and in the UK played a leading role in the Global Sustainability Reporting Initiative with good links to governmental issues. "It continues to stand as the vanguard of efforts to encourage business, government, the media and academia to recognise the impact on business performance of sustainability issues. Its ground breaking awards scheme, which has recognised and promoted the best practice in environment reporting since 1991, now covers wider sustainability issues. During the year our governing body launched national sustainability reporting awards in Australia, Hong Kong, Malaysia, Pakistan, Singapore and the United States," he said at ACCA's recent annual sessions. President
calls for report on Sathosa deal They said the president sent a note to the cabinet last week raising several issues relating to the sale of a 40 percent stake in Sathosa Retail Ltd and has asked for a comprehensive report from the minister. Karunanayake has denied reports of lack of transparency in the tender process which has been on since last November. Last month, the Ministry called for amended financial bids from the five parties that submitted offers in November, on the grounds that the value of the stake has increased. Three of the original bidders have submitted amended bids. Villa
owners oppose Taj plans at Bentota The group, individually owning about 10 small, exclusive properties that have drawn the rich and famous - even former Beatle Paul McCartney and his daughter stayed at one of these villas about a year ago -, is furious that the Taj is going to build on a stretch of beach that ostensibly is a protected area. "We would lose everything if the Taj is given this strip. This green belt is a reservation and a protected area," said S.M.A. Hameed, spokesman for the group and owner of the exclusive Club Villa. The area in question is a stretch of mangrove and beach about three kilometres in length and lying between Saman Villas and the Taj Exotica, and is right in front of the properties owned by the protestors. The complainants include multinational Unilever (having a bungalow there) and Ajay Zecha, son of billionaire hotelier Adrian Zecha who is pushing ahead with plans to acquire or newly build his hotel chain across Sri Lanka. They have all signed a letter of protest and sent it to Prime Minister Ranil Wickremesinghe, urging him to call off the project. Board of Investment Chairman, Arjunna Mahendran, who met the group along with a representative from the Taj group, was quoted as saying that the government was keen on the Taj investment and requested the concerned parties to agree to a compromise in which a passage to the beach from their properties would be permitted. The group has rejected the proposal. If the Taj goes ahead with the construction, the chalets would obstruct an undisturbed view of the beach for the older-established villas - some designed by architect Geoffrey Bawa - and would result in lost business. "This undisturbed beach view is the main selling point of these villas boutique hotels and would seriously endanger the business," the letter to the PM said. The room rates at the luxurious properties range from $150 per night to $400 per night and some of their clients include film star Bo Derek, famous fashion designers, writers and producers. "They are able to spend a comfortable holiday without being disturbed," Hameed said, adding that, that's how McCartney stayed at Bentota without being discovered. Nayantara Fonseka, owner of Taru Villas, said that they were told at the BOI meeting that Tata group investment running into millions of dollars was essential and the government was keen on this investment. Environmentalists have joined the campaign and are raising concerns about the fate of turtles - some very rare species - bird life and mangroves. "This is a protected area and is preserved by the coastal conservation department. I don't know how someone has been given permission to build on this green belt," an from the Wildlife and Nature Protection Society said. There are six species of turtle and 70 species of migratory birds. Once before too residents blocked efforts by the Taj - when it was building the Exotica hotel in 1995 - to develop this land. Then Tourism Minister S. Thondaman intervened at the request of residents and halted the plans. Residents were
alerted to the latest move when government officials began visiting
the site about three weeks back. "We found some activity going
on and then discovered that the Taj was planning a fresh project
on the site," said Hameed, who noted that local authorities
have not allowed even a flag to be planted on this stretch. "We are not opposed to development but you must be fair and equitable," Hameed said. The row of villas has a total of 60 rooms, accommodating about 120 upmarket tourists and employs 130 locals. (FS) |
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