Apr 01, Colombo: A considerable progress has been made in the consolidation of the financial institutions to create a stable financial sector during the month of March 2014, the Central Bank said Monday.
Several banks and finance and leasing companies (NBFIs) have shortlisted potential merger/acquisition counterparts and are carrying out internal evaluations on such companies, according to the Central Bank.
The Bank said it has also approved in principle, certain possible consolidation activities amongst a few banks and finance companies.
Several audit firms appointed by the Central Bank to carry out due diligence and valuation of the companies are in the process of finalizing their reports.
Meanwhile, the Central Bank has granted approval in principle, for strategic investments by investors infusing fresh capital to some of the banks and NBFIs. Such investments are expected to strengthen the balance sheets of those entities while enabling them to expand their business operations, the Bank says.
The Central Bank said it has continued to maintain a close dialogue with all stakeholders of the consolidation process, while senior Central Bank officials have also participated at various public fora on financial sector consolidation, in order to clarify various matters pertaining to the consolidation process.
On Central Bank's request, banks and NBFIs, sticking to the time line of 31 March 2014, have commenced submitting their broad plans on consolidation and greater participation in the economic activities to the Bank.
The Central Bank will review the plans within the coming week, and sent suitable responses to the financial institutions.
Meanwhile, the National Development Bank PLC and DFCC Bank have entered into a Memorandum of Understanding in order to proceed with their merger process.