TFC to merge with SMIB?

By Quintus Perera

Employees of several Sri Lankan banks are opposed to the financial sector reforms by the Central Bank (CB) citing for example the viability of a proposal to merge the loss-making The Finance Company (TFC) with the profitable State Mortgage and Investment Bank (SMIB).

Channa Dissanayake, acting Secretary of the CBEU, said the SMIB recorded a net profit of Rs. 400 million last year whereas it was a loss of Rs. 800 million at the TFC. “With such a weak financial institution how could the SMIB be stronger?” he asked. Officials from the institutions were unavailable for comment to verify the proposal or the figures mentioned.

Mr. Dissanayake and CBEU’s acting President S.P. Jayaratne were speaking to the Business Times on the position of employees and the planned reforms. They said the CBEU has issued statements on behalf of employees of the Bank of Ceylon, State Mortgage and Investment Bank, Seylan Bank, MBSL Savings Bank, People’s Bank, Hatton National Bank, Sarana Development Bank, Provincial Development Bank, HDFC (Housing Development Finance Corporation) Bank and the Sri Lanka Savings Bank, indicating their opposition.

Mr. Jayaratne said that the CB was not forthcoming with all the information about these reforms. He said that the CB Governor Nivard Cabraal has indicated that there could be retrenchment of employees and top jobs also, pointing out that in some countries this kind of reforms were tried and failed.

He said while state banks and state financial institutions come under the Finance Ministry, its Secretary and officials are yet to express their views on the reforms, pointing out: “Who would take the responsibility, if the financial markets are affected by the aggressive changes that are envisaged?”

Mr. Dissanayake in his comments referred to loans taken by state banks, saying foreign financial institutions have indicated that the asset base of some banks are not sufficient to stand surety for some of the loans these banks have obtained.
http://www.sundaytimes.lk/140601/business-times/tfc-to-merge-with-smib-100528.html

That is very wrong. We have to safe guard the depositors at every where. That's the prime role of the CB. That's what there doing now. Some financial organizations are making billions of profits and some are making billions of losses.
TFC is one of the oldest finance company. We have to safe guard it anyhow. I firmly believe that the company had to face this situ because of the golden key issue. Risk of this kind of a thing may happen to every bank/FIs. My idea is no body can go against it.

What CB should do is ask banks who are making billions of rupees to take over these type of organizations. CB made timely involvement to safe guard SEYB. Thanks to them billions of rupees invested by poor depositors in this country in that bank are in safe hands now. we should encourage these activities. people who go against this move is thinking of their benefit only.

With regard to TFC ..... An investors who is from one of Asian countries is going to infuse much needed capital to them. This will happen very soon to my knowledge............?