NDB-DFCC merger takes a breather; Govt. decision anticipated in April

Wednesday, 11 March 2015 00:08 - - {{hitsCtrl.values.hits}}

By Channa Fernandopulle The much discussed merger between DFCC and NDB has been put on the backburner according to NDB CEO Rajendra Theagarajah Responding to a query during an investor forum yesterday, Theagarajah explained that since the new Government had decided to review consolidation plans, NDB had redirected its focus towards core banking activities while it awaited a decision from a specially appointed committee into the matter.

“There is an ongoing discussion regarding the views of the new regime in terms of their philosophy on consolidation and I believe that there is a formal committee appointed by the Prime Minister to look into this. Referring to the process of consolidation which had been fast-tracked under the auspices of previous the former Governor of the Central Bank of Sri Lanka, Ajith Nivard Cabraal, he stated: “We have given our views as to why we believe the journey we embarked on last year is a valid one and we believe that sooner than later – probably in April – that committee will conclude its findings and formally make available a public document which will then hopefully help us to form the basis to take that journey forward.” In the meantime, Theagarajah stated that NDB had “taken a breather” on the consolidation process in order to focus on its core banking activities and organic growth strategies. He further noted that it was due to the initiation of the consolidation process that NDB had paused expansion of its branches last year, an expansion drive which has since resumed with the establishment of three new branches. “Let me on behalf of the Board and management reiterate that our quest for inorganic growth remains stronger than ever,” he asserted. When asked about the possibility of securing additional capital during the year, Theagarajah hinted at potential developments towards the end of this year. “We’re currently leveraged at just over x9 and we believe there is scope to further improve on this figure as business opportunities improve. One way of balancing our ROEs is to challenge our own leverage expectations and with that there may be some opportunity maybe towards the end of 2015 or the early part of 2016. “Our strategy in the meantime will be to continuously engage with various groups of shareholders so that in the event that an opportunity does arise, there won’t be any surprises and everyone will be kept informed of such developments as they happen.”