Dec 25, 2016

Seylan Bank in peril as Japanese investor to withdraw Rs. 3,500 million Featured

The Seylan Bank is in danger of economic failure following the cancellation of a deal to sell 13 million of its shares (7.5 per cent of total shares) owned by the Bank of Ceylon, reports say.

Share market sources say Japanese businessman Motohiko Homma has decided to withdraw nearly Rs. 3,500 million (25 million USD) of his money deposited in Seylan Bank following the cancellation of the deal.

The bank will not be able to survive the withdrawal of such a large sum of money suddenly, says the sources.

With business interests in Japan, the US, Australia and Singapore, Homma had got involved in the Seylan Bank share sale at the request of one P. Gunasekara, a key customer of the bank.

They are business partners and own a 19 per cent stake of Australia’s Pacific Turbines in Brisbane.

Homma made the bid for the Seylan Bank shares through his Singapore registered Asir and Nec (Pvt.) Ltd.

According to reports reaching us, he had several other business plans in mind when he had come forward to buy the Seylan Bank shares.

PM’s mediation

There have been reports in the media that the prime minister had instructed the cancellation of the deal, after he received information that serious fraud had taken place, and that the subject minister or the ministry secretary had not sanctioned the deal, in a planned sale of 13 million Bank of Ceylon owned shares in Seylan Bank.

The PM has also instructed the FCID to investigate the matter, as the Japanese businessman had offered a higher-than-normal price per share.

The Bank of Ceylon, being the sixth largest shareholder, owned 13,198,305, or 7.5 pc of declared assets, voting shares of Seylan Bank.

The per share value at the time was Rs. 85.00, but Homma had offered a price of Rs. 100 per share.

Deal was legal

Share market sources say the deal worth Rs. 1.32 billion was legal.

The broker firm that facilitated the deal has made a request for its cancellation, which too, is legal.

However, there are questions over the cancellation of the deal owing to the behind-the-scene happenings.

PM misled

The parties that had urged the PM to order the cancelation had not given him the real facts of the deal, and had cited the businessman as a pawn of a top shareholder of Seylan Bank.

No discussion had taken place with Homma, who had not been given an opportunity raise the matter with either the president or the PM, although he was in the island on December 22 and 23.

Sources say a certain businessman who had bought shares of several financial institutions through inappropriate means and had his eyes on the Seylan Bank shares too, had used his political friendships to send wrong signals to the PM.

Homma has been told by his advisers not to make any further investments in Sri Lanka and to withdraw his investments already made.

Financial experts say the share market will be adversely affected by such government decisions and warn of a reduction of foreign investments and a lack of confidence in the government.

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