Harry still controls HNB though not being top shareholder

Two foreign funds through Lanka Orix Securities lapped up around seven million shares in Hatton National Bank (HNB), early this month in a move that had the stock market speculating that its parent, LOLC along with related parties are trying to ‘ control ’ the bank. “This was mainly due to many who widely believed these funds are linked to Ishara Nanayakkara (owner of LOLC) and his connected parties,” a stock market analyst said.

However a source close to Nanayakkara denied this saying that Nanayakkara had sold his shares of HNB to a foreign party recently and only Browns Group which he took control of recently together with related parties has 15.1 percent of HNB. “He does not own anything of HNB and the foreign funds who bought seven million shares have no connection to him,” the source said. “We are buying large blocks at average prices and the prices are not high,” he said.

Early this month an Indian fund based in Singapore bought 2.4 percent and a Californian based property development firm bought 1.35 percent of HNB. The latter bought this stake to bring their total holding to 10 percent. There are two more foreign funds which have 10 percent each in HNB, a Mauritius based company has seven percent and connected parties have two percent. Many believe that these are connected parties.

The analysts point out that it is not possible or practical to control HNB given the current Central Bank regulation on single shareholder limits. “There are six different parties who are closely connected. Together these parties have more than 46 percent. But the single share holder limit of 15 percent - if they act in concert - stops them from openly saying that they own HNB,” the stock market analyst said.

He said that business tycoon Harry Jayawardena who was in control of HNB (with 43.5 percent) before these regulations came in to place had ‘his’ board of directors in place at the bank which gives him the power over others. “It is ultimately who controls the board that matters. The key decisions are agreed upon by the board of directors. As of now Jayawardena controls the board,” he said.