|
|
|
| Sunday, 23 October 2005 |
 |
|
 |
Business |  |
| News Business Features Editorial
|
COMBank crisis - Depositors' rights take precedence, say TUs by Gamini Warushamana Depositors' rights should be preceded over shareholders' rights, said Commercial Bank trade unions demanding Central Bank intervention to solve the crisis in the Commercial Bank over the business tycoon Harry Jayawardena's acquisition of over 40% of the Bank's shares. Ninety-five percent of the money in the bank is public money and there is only five percent shareholders money. Therefore the Central Bank and the Monetary Board should take urgent action to reduce Harry Jayawardena's shareholdings to 10% complying with the Banking Act, the unions said. Unions are in a dilemma as to the present inaction of the authorities and have warned of possible trade union action jointly with all banking sector trade unions under the banner of the Ceylon Bank Employees' Union (CBEU). "The Unions have not yet considered legal action because we still have faith in the regulator and our own strength," said Secretary General of the CBEU M. R. Shah. Harry Jayawardena plays a key role in the Hatton National Bank as a shareholder with board representation as well in borrowing and writing off large amounts of money to connected companies, unions charged quoting HNB annual reports. This is unethical and against the Banking Act under lending to directors and connected parties of a bank, they said. In addition, Harry Jayawardena holds substantial shares in Commercial Bank and the DFCC through connected companies. After his acquisition of the Sri Lanka Insurance Corporation when it was privatised Jayawardena and his connected companies got control of nearly 50% of the shareholdings of the Commercial Bank which are far in excess of the maximum 10% permitted under the Banking Act. The Unions said the EGM of the Commercial Bank has called for the removal of the present Chairman of the bank Mahendra Amarasuriya without giving any reason. The matter would not end even after removing Amarasuriya. The issue is not related to individuals and it would be a move to control the board of directors of the Commercial Bank and ultimately consolidation in the Banking sector. The practice is completely against the Banking Act and it endangers the Commercial Bank, banking system and ultimately the whole economy, the unions said. The Unions point an accusing finger at the Central Bank and feel its inaction will be due to involvement of powerful individuals in the issue. If the four banks HNB, Commercial Bank, DFCC and Vardhana Bank were consolidated as proposed in some quarters, one person would control almost 45% of private sector banking assets. It is a grave risk to those banks, the banking system and the economy of the country. |
|
| News | Business | Features
| Editorial | Security
| Produced by Lake House |
