Privatisation of Bank of Ceylon

By Gamini Fonseka

In the recent Budget the President announced that 20% of the shares in State Banks will be sold through the Colombo Stock Exchange for local and foreign investors. I do not think there are many of us who knew about the history of BOC. I remember my grandfather telling me that he holds a piece of paper that shows that he is a part shareholder of BOC. I think (subject to correction) what he meant was when BOC was first founded it was a joint stock company incorporated under the Company Ordinance of 1938. Thereafter somewhere in 1947 it was taken over by the Government and since our Independence we have not paid any compensation to the poor shareholders. So like many of our ventures it took a full cycle of 74 years to come back to this position. BOC had some illustrious Chairmen and Board of Directors from time to time. However, since the mid-80s political appointments were made to the Board of Directors of BOC. Sometimes the highest executive levels such as the General Managers were also political nominees of various politicians though bankers.

Among the elite Chairmen of BOC was Late Gamini Wickremanayake and the first Chairperson of BOC Sumi Moonasinghe. Many progressive steps were adopted by Gamini Wickremanayake when he held the office of Chairmanship.  To his credit computerisation of various activities was started. This was done with assistance from Booze, Hamilton Allen of USA to which I assisted from Ernst and Young Colombo office. During Sumi Moonasighe’s time Twin Towers at Fort were planned under Overseas Reality (Ceylon) PLC and the 18-acre land at Wellawatta Spinning and Weaving Mills (Redi Mola) property were also vested to a public quoted company under Shin Kwan Group, Singapore. They stand today as monuments adding so much colour to the skyline of Colombo.

BOC possesses unique historical buildings in Colombo and in many outstation cities. I would suggest that either through Property Development Co. Ltd. which was a Quoted Company until last year when it was delisted by BOC when they reached 95% of the share threshold, we all vested in that company in the share market with a public floatation. The iconic buildings in Colombo Fort that is owned by BOC stretches out from Colombo Apothecary Building right up to Colombo Port, including the Grand Oriental Hotel which could be turned into Raffles in Singapore. Then BOC also owns the building adjoining the CTO building in Fort. I also think that they own very prestigious buildings in Kandy, Galle, Anuradhapura and Jaffna. With the level of digitalisation there is no need for the banks to own such prestigious properties without any returns. In order to show the true profitability of the various branches I think a policy decision should be taken on rented properties.

Another idea I would like to float is to make BOC the holding bank with nine Provincial Banks, so that the Board of Directors of each such bank could consist of four from the holding bank and three from the main customer base who would function as three non-executive Directors who should be professionally qualified. This is the route which I would like BOC to take.

In conclusion, the same model could be adopted for doing People’s Bank too.