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| Sunday, 17 July 2005 |
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SMB to grow through rights issue Seylan Merchant Bank (SMB) plans to carve out space for growth by bringing its capital adequacy ratios on par with those of leading commercial banks through a rights issue of one share for every three held. The issue is expected to result in an infusion of Rs. 122.38 million which will enable SMB to increase its Tier II Capital Adequacy Ratio to around 10 per cent, enabling the bank to enhance its borrowing limits. The shares will be issued at Rs. 11 per share, with a premium of Rs. 1 to some 7,200 shareholders of SMB. Renunciation was allowed up to Tuesday, July 12, the bank said. About 60 per cent of the existing shares are held by companies of the Ceylinco Group. Applications for additional shares were closed on July 12. In the event by July 12, the rights issue was fully oversubscribed, the additional shares will be refunded. If not, the unallotted shares will be allocated to applicants on a pro rata basis. The Director/General Manager of SMB Rohan Senanayake said he believes the SMB share to be undervalued in the context of historical performance. "There has been encouraging interest in the progress of SMB and this Rights Issue will facilitate a new phase of growth," he said. SMB will continue to focus primarily on lending, leasing and fixed income securities trading. A particular emphasis for expansion is expected on DEX trading activities (dealing of the beneficial interest of government securities and corporate debt on the trading platform of the Colombo Stock Exchange), through innovative value added products and wider reach. |
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