HNB’s mission to scale local enterprises into global giants with best-in-class wholesale banking services

HNB Deputy General Manager – Wholesale Banking Group Damith Pallewatte

In the wake of unprecedented global headwinds, and profound social, political and technological disruption, Sri Lanka’s economic revival is poised on a knife’s edge. Particularly compared to 2022, significant progress has been made in stabilising macro-fundamentals. Yet, economic insecurity weighs heavily on Sri Lanka’s citizens, and its enterprises. 

According to HNB Deputy General Manager – Wholesale Banking Damith Pallewatte, a sustained economic recovery hinges on the ability of local businesses to not just bounce back, but also drive a paradigm shift Sri Lanka’s engagement with an increasingly volatile global marketplace. 

“While large corporations with established export capacity will naturally play a pivotal role in stabilising Sri Lanka’s economy, true economic revival depends on our nation’s ability to diversify its export portfolio, generate sophisticated domestic value-addition, and strategically nurture a new generation of emerging corporates into export powerhouses,” Pallewatte said. 

Leveraging the right mix of technical and technological expertise, the bank is now actively positioning its Wholesale Banking Group (WBG) to serve as a key partner in Sri Lanka’s export-led economic revival. 

Rising challenges and shining opportunities

“Sri Lankan enterprises have been grappling with various and increasingly severe economic challenges since 2019. While some are caused or exacerbated by long-standing systemic issues, others are hyper-novel, arising out of the major post-COVID disruptions to global supply chains, a radical increase in the rate of technological change. 

“Most notable among them is the emergence of Large Language Model (LLM) Artificial Intelligence (AI) systems, Machine Learning, and with it, the growing potential for broad-spectrum digitalisation of industry, services, and even the public sector. This new frontier of technology may hold the key to unlocking drastic enhancements in productivity, and efficiency, which could in turn create fresh growth opportunities for Sri Lankan enterprises,” Pallewatte explained.  

The need to strengthen resilience, agility, and export capacity of domestic enterprises takes on even greater importance given that businesses and consumers both locally and globally are facing tight financial constraints. 

In the fall-out of the worsening Russia-Ukraine conflict, global spikes in inflation prompted

unprecedented shifts, including a growing discussion among BRICS nations to move away from the US Dollar as the dominant currency for settlement of international trade. Even at home, the possibility of greater integration of the Indian Rupee into Sri Lankan trade has the potential to open up significant new markets much closer to home. 

“The goal at HNB WBG is to support Sri Lanka’s most visionary, dynamic, and entrepreneurial businesses to sustainably build and innovate on their product and service offering and capture a much larger share of these emerging opportunities.” 

He explained how HNB WBG’s strategic identification, and engagement with these businesses would support them with reliable and efficient access to finance and the best technical expertise in the industry. This in turn empowers local enterprises to help streamline processes, strategically scale-up capacity, and build stable international trade relationships in an increasingly unstable global marketplace. 

Redefining the role of wholesale banking 

“HNB envisions a Sri Lanka 4.0 where wholesale banking becomes a catalyst for innovation, growth, and resilience. The traditional role of a bank is no longer sufficient in this dynamic landscape. To drive economic revival and empower local enterprises, banks must be at the forefront of technological advancements and offer tailored solutions that cater to the evolving needs of our clients,” Pallewatte noted.

This understanding comes from the bank’s own remarkable journey of growth and transformation, given that HNB’s WBG vertical was created in 2020, just prior to all of the historic disruptions that took place. He explained how the goal at the time was to create a highly integrated value proposition catering to large corporates, emerging corporates and institutional clients, and offer a standard of service and technical expertise of a global standard, but centred on local needs. 

A multifaceted domain, wholesale banking encompasses four distinct segments: conventional banking, transactional banking, investment banking, and securities. In the realm of conventional banking, HNB’s relationship managers work closely with clients to oversee loan portfolios and financing arrangements, providing support and expertise to facilitate their requirements. 

Simultaneously, HNB’s increasingly digitalised transactional banking services play a pivotal role, enabling seamless payments and collections, efficient supply chain management, and streamlined international trade and cross-border settlements. 

Similarly, HNB’s expertise in investment banking extends to supporting clients in accessing capital markets, raising investment capital, and navigating complex financial transactions, including mergers and acquisitions – all functions the bank anticipates will be in significant demand, as more FDI gradually start to flow into Sri Lanka, in turn leading to consolidation among local enterprises, and joint ventures with international parties. Moreover, its securities services provide trusted trustee and custodian arrangements along with access to a diverse range of security options.

Catering to the unique needs of large-sized SMEs on the cusp of transitioning into corporates, the bank’s Emerging Corporates segment guides these businesses through their transformation journey, offering financing solutions and expertise enabling the integration of industry best practices and process optimisation. Currently, HNB is working with approximately 400 emerging corporates across the country.

The bank is also home to Sri Lanka’s largest and most technically experienced team of trade finance specialists. The build-up of the best domain experts has enabled milestone transactions for its clients – both in exports and imports. 

Moreover, the Transactional Banking proposition facilitates seamless customer payments and collections, with digital solutions proving highly effective. This includes recent innovations like HNB TXB – a potent digital Payments and Cash Management Solution that enables seamless operations through local and cross-border payments, statutory payments, cash management products, connectivity options, enhanced security, and the ability to seamlessly integrate any payment channel, as well as ERP systems, enabling radical new possibilities for local enterprises. 

Additionally, HNB has tied up with the Asian Development Bank to offer supply chain financing solutions, aiding in enhanced balance sheet management for suppliers and buyers.

In the realm of Project Financing, the bank is also a local leader in funding renewable energy development, including national landmarks in solar, wind, hydropower, biomass, and waste-to-energy conversion projects. A team of specialists diligently assess and monitor these projects for environmental impact, cash flow management, and return on investments throughout the phases of evaluation, implementation, and beyond.

Custodian and Trustee Services are another unique proposition offered by HNB within the Sri Lankan market. Commanding a substantial market share in the trustee services and custodian markets, the unit manages various large funds, such as the EPF and other superannuation funds, for the corporate sector and high net worth individuals. Moreover, reliable and reputed custodian and trustee services are prerequisites for international investors seeking to enter capital market transactions in Sri Lanka.

Similarly, HNB’s Islamic banking proposition holds a market share of around 20%, with the bank integrating the product suite into its wholesale banking proposition in 2020, recognising the increasing interest of large corporations in Sharia-based products.

Meanwhile, HNB’s strong global network has also enabled a thriving Institutional Banking practice with financial institutions across Asia, the Middle East, Europe, Australia, and around the globe. This arm facilitates banking transactions for customers seeking overseas business opportunities at an affordable cost and opportunities to tap into valuable foreign investment sources.

“As we navigate challenges and seizes the opportunities of today’s ever-changing banking landscape, the HNB WBG team remains steadfast in our dedication to empowering local enterprises to scale themselves up to capture global growth opportunities. Through a seamless blend of technical knowledge and advanced technology, HNB is committed to serving as a trusted partner in each of our clients’ journey to success. 

“We invite the nation’s entrepreneurs, industry leaders, stakeholders, and policymakers to join us on this journey of growth and transformation. By working together, we can build an export-led sustainable business ecosystem that can propel Sri Lanka’s economic revival into new heights of prosperity and global prominence,” Pallewatte stated.