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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ »  EPF buys 10 percent stake in Cargills Bank with board influence

EPF buys 10 percent stake in Cargills Bank with board influence

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Sri Lanka’s state-controlled pension fund, Employees’ Provident Fund (EPF) is believed to have made a substantial investment in Sri Lanka’s Cargills Agriculture and Commercial Bank (CACB), the yet to be launched greenfield banking unit of Cargills group, Mirror Business learns.

According to informed sources, the EPF is believed to have made Rs.550 million investment in CACB to acquire a10 percent stake with a director board seat.

However, when contacted CACB’s CEO Harris Premaratne neither confirmed nor denied EPF’s move and declined to comment on the matter urging that he was not in a position to disclose anything.

Officials representing EPF or Central Bank were not available for comment.

World Bank’s private sector investment arm, International Finance Corporation (IFC) and DEG, a unit of German state development bank KfW, announced a few months back that they were making investments in CACB, acquiring 10 percent each.

According to IFC’s website, the entity was expected to a make an equity investment of US $ 3.84 million to acquire 10 percent stake of CACB, which would amount to 44 million shares of the bank’s initial share capital and US $ 7 million senior loan to support the bank’s debt funding requirements. When contacted, IFC Country Director, Adam Sack, told Mirror Business that IFC is currently maintaining an investment portfolio of about US $ 200 million in the country, and has investments in Sri Lankan banks.

“It is encouraging to see EPF believing in the future potential of Cargills Bank and making investment commitments alongside IFC,” he said.

In September 2011, the Central Bank of Sri Lanka granted CACB with provisional approval to set up banking operations subject to fulfillment of routine terms and conditions.The bank is expected to set up significant operations in the underserved North and East region and increase access to finance to micro, small and medium enterprises (MSMEs). It is further expected that CACB will utilize the countrywide supermarket chain of its parent company to expand its presence.

The Sri Lankan government has sizeable investments in almost every commercial bank in the country—including government nominees as board members— primarily though EPF and several other state-owned entities.

Some analysts, good governance activists and opposition party legislators have pointed out at the possible conflict of interest situations arising from such investments by EPF, with the Central Bank, under which EPF operates, being the banking regulator.
http://www.lankasri.com/ta/link-33I6C232TS.html

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
For sake of all other private banks n financial institutes, I really hope CACB will not have a success story.

This new bank could be one of the reasons behind CTHR’s selling of CERA.

sandunj


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Will be a another silly investment by EPF Question ...

rainmaker


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
You know at one time the *$&@ grew 50 acres of apples, grapes, maize each etc in a dry unfertilised surface in the north.

Today if you look at the food import bill well ....

The banks don't allocate capital for the industrialisation of the agriculture industry. Everyone even 30,000 a month office workers can get loans but not the agriculture industry..... the entire industry is surviving on a informal high interest rate lending environment by rich individuals

When it comes to Paddy, nobody provides finance the purchase of paddy except BOC..... check the cabinet decisions around this time where the BOC is issued a directive.

The greatest disservice that the IMF did was to deconstruct the Paddy Marketing Board that gave farmers a decent profit at the loss of the govt. The loss is nothing compared to current institutions






Burpy


Senior Equity Analytic
Senior Equity Analytic
usually CBSL quickly issue press statements denying something, this time they diddnt and there is no annoucement from CARG about this, so it must be true. Razz 

Burpy


Senior Equity Analytic
Senior Equity Analytic
@UKboy wrote:For sake of all other private banks n financial institutes, I really hope CACB will not have a success story.  

This new bank could be one of the reasons behind CTHR’s selling of CERA.

i also think they will not do well. they have been postponing the launch for too long and some staff recuited have already left.

they are struggling to raise money i think.

I think it is a big waste to capitalize another bank right now when these money could be used for more productive industries.

Razz 

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