Monetary Board gives directions to NTB

• JKH Group can hold near 30% stake till 2020 and reduce it to 15% thereafter

• Voting rights restricted to 10% with effect from 31 March next year

The Monetary Board has given new directions to Nation Trust Bank (NTB) with regard to the John Keells Group’s shareholding in the commercial banking venture.

The Director of Bank Supervision of the Central Bank has informed NTB that the Monetary Board has permitted the John Keells Group to retain its current shareholdings (nearly 30%) in the bank till 31 December 2020 and to reduce it to 15% with effect from that date. 

The Monetary Board has also required NTB to limit the voting rights of the John Keells Group to 10% with effect from 31 March 2018. 

JKH said NTB will continue to be an associate company of the Group and the Group’s External Auditors have concurred with this position.

The Monetary Board had previously directed that the Group reduce its share holdings in NTB to 15% or below by April 2012. The founder shareholders, including JKH, had written to the Central Bank requesting an extension of the deadline and were awaiting a response, which was conveyed last month. 

JKH directly holds 20% stake in NTB whilst related party Mackinnons Keells Ltd. owns a further 9.9%.

Other major shareholders of NTB include Central Finance Company Plc 9%) and related parties CF Growth Fund (6.4%) and CF Insurance Brokers (6%), HWIC Asia Fund (15%), Janashakthi General Insurance Ltd. (8%) and Steward Investors Asia Pacific Fund (6.67%). The public shareholding of NTB is 34.81% held by 6,098 shareholders.

NTB on Friday announced a Rs. 5.06 billion pre-tax profit for the first nine months of the year, up by 31% over the corresponding period of the previous year. 

In keeping with the enhanced capital requirements arising from the introduction of Basel III, NTB also announced a rights issue of four convertible nonvoting shares per 23 ordinary voting shares held at Rs. 80.00 per share. The shares will be convertible to ordinary voting shares on a quarterly basis as stipulated by the bank.

NTB expects to raise a total of Rs. 3.21 billion, from which the JKH’s share of the rights issue would amount to Rs.959 million. JKH said it would fully subscribe to its entitlement.