Financial Times

Sampath-like battle brewing for Harry?
As a group of shareholders backing tycoon Harry Jayawardena prepares to oust Mahendra Amarasuriya as chairman of Commercial Bank next week, banking unions were flexing their muscles for a showdown in a Sampath Bank-like battle.

Some years ago, Jayawardena-led efforts to control Sampath Bank – through the Hatton National Bank (HNB) where he has a major stake – failed after a long process which included court action. That was mainly due to unions resisting the takeover bid.

Four shareholders, Sri Lanka Insurance Corporation (SLIC), HNB, Distilleries Co and Readywear Industries have called an extraordinary meeting on November 2 seeking to remove Amarasuriya from his post. SLIC in a statement last week denied allegations of a merger between DFCC, HNB and Commercial Bank and said the latter’s jobs are safe.

Unions from Commercial Bank, seeking the intervention of the regulator – Central Bank – to stall Jayawardena’s bid, were last week joined by the People’s Bank Officers’ Association. Earlier on Saturday, the Commercial Bank union took out a protest outside the bank demanding that Central Bank stop the move to oust Amarasuriya saying Jayawardena wanted to take control of the bank like he has done at HNB and DFCC, through interested parties.
But the Securities & Exchange Commission (SEC) said the four parties were not acting in concert in relation to the Commercial Bank crisis.

An SEC source said on the available material there was no evidence to show the parties were acting in concert and had not thus violated provisions of the Takeover & Mergers code.

The People’s Bank Union in a statement invited the financial sector and the public to pressurise the Central Bank and the Monetary Board to take prompt action to protect the banking system, depositors and customers from corporate raiders. Banking sources said the Bank of Ceylon Officers’ Association and other unions of the Ceylon Bank Employees’ Union were also issuing statements of support this week.

The People’s Bank Union said Jayawardena’s ambition and efforts so far to create a private monopoly of the financial sector by combining HNB, DFCC and Commercial Bank will definitely extend to other institutions in the industry, such as insurance and build a giant paving way to ruin the economy of the country.

“Our stand should be to save the entire banking sector from all corporate raiders and we would like to invite the attention of the Monetary Board to intervene proactively to maintain the stability of the financial sector. If the existing legislations are not strong enough to manage this situation, the Central Bank should take regulatory action to introduce new laws to address this issue,” it said.

Last week, the Central Bank turned down a request for a meeting from Commercial Bank union leaders while the unions in turn snubbed officials of Jayawardena’s SLIC when they sought an interview to ‘clarify the rumours.’
Commercial Bank Branch Union Secretary, M. R. Shah told The Sunday Times FT that Central Bank authorities had refused to grant an interview saying ‘all concerned parties are awaiting to discuss this matter with the Central Bank.’

“This reason is not very clear and at the same time it is very lame, because we feel that as a regulator it is the Central Bank’s duty to listen to all the parties concerned,” he said. He said the Bank Supervision Department had replied to their letters saying that the Central Bank is seeking further legal opinion regarding the matter.

He said an anonymous newsletter circulated to all Commercial Bank branches was promoting the ousting of Amarasuriya while declaring that employees won’t lose their jobs. Shah said some senior Treasury officials also agree that the Banking Act needs to be changed to avoid this kind of situation.
Unions allege that by removing Amarasuriya, Jayawardena will have more authority to interfere in the bank’s internal affairs.

“We have seen this happening at HNB and do not want it to happen at the Commercial Bank, because we are very proud of the ethics, standards and the corporate governance the bank has so far upheld,” Richard Rodrigo, President, Association of Commercial Bank Executives said.

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