Saturday Dec 21, 2024
Saturday Dec 21, 2024
Wednesday, 17 August 2016 00:10 - - {{hitsCtrl.values.hits}}
Deutsche Bank said yesterday it had concluded an agreement to settle with the Sri Lankan Government and the Ceylon Petroleum Corporation over the much publicised, controversial and costly hedging deal in 2008.
“We are pleased to announce that Deutsche Bank AG has concluded an agreement to settle its longstanding dispute with the Democratic Socialist Republic of Sri Lanka and the Ceylon Petroleum Corporation relating to an oil hedging transaction concluded in 2008, on amicable terms,” Deutsche Bank said in a brief statement. Deutsche Bank said the dispute related to events that took place sometime ago. “With this settlement we hope to leave the past behind us and move forward,” the bank said without disclosing specifics of the agreement.
Deutsche Bank has been operating successfully in Sri Lanka for the past 34 years and during this time has developed a strong relationship with the Sri Lankan Government and the Central Bank.
“We look forward to continuing to build and foster this relationship in the coming years,” the brief statement added.
In 2008, three foreign banks - Standard Chartered, Citigroup and Deutsche - took legal action after Ceypetco refused to make hedging payments of more than $ 460 million, including to two local banks. Deutsche had asked the Washington-based International Centre for Settlement of Investment Disputes to arbitrate.
Ceypetco, which imported some 26 million barrels at a cost of $ 2 billion in 2007, needed to hedge its purchases of crude oil and refined products on the international market.
It was exposed to the oil rally of 2008, when oil hit a record high above $ 147 a barrel in July before crashing to less than $ 40 a barrel in December.
In 2012, the then Government lost a $ 60 million hedging case against Deutsche Bank after a US-based arbitrator ruled in favour of the bank. In 2013 the then Government paid the SCB $ 60 million plus interest for the non-payment of dues to settle the five-year-old hedging dispute. This was much better than the $ 180 million — $160 million plus 20% interest — originally awarded to SCB by a British Court in November last year.
