COMBank, NDB Bank talks on possible merger

At separate meetings of the Boards of Directors of the Commercial Bank of Ceylon Limited and the National Development Bank Limited, it was decided to enter into negotiations on a possible merger of the two Banks.

In the event that negotiations are successful, and the manner in which the merger may be achieved is agreed upon, the proposal for such merger will be submitted to the Monetary Board of the Central Bank of Sri Lanka, for its approval.

At this stage therefore, the possible merger of the two Banks is dependent upon the success of the negotiations, and the grant of the approvals by the Monetary Board and other regulatory bodies, as well as by the shareholders of the two Banks.

The banking industry in Sri Lanka faces many challenges and opportunities. These include offering new products at prices affordable to the consumer, seizing opportunities in trade and investment overseas, as regional and global markets become more open and the need to reach out to the underbanked sector of the population at home. Local banks also need to stay competitive in the face of increasing challenges from global and regional banks.

This involves a heavy investment in skills and technology, and the raising of substantial amounts of new capital, to support the scale of operations that are needed to bring higher levels of efficiencies and lower costs. It is clear that banks can best meet these opportunities by combining their strengths.

It is in this context that the Boards of the Commercial Bank of Ceylon Limited and the National Development Bank Limited, have decided that they should explore the possibility of merging the two Banks, and determine whether the efficiencies, synergies and the critical mass, that a merger should bring, would result in benefits for all the stakeholders of both Banks.

The Boards also viewed positively, the complementary nature of the businesses of the two Banks. Thus, the combined entity would have strengths across the board in commercial banking, international trade finance, SME and consumer finance, as well as in project finance, capital markets and insurance. In addition, it would result in a wider customer base to maximise cross-selling opportunities.

The combined strength of the two entities would also make it more feasible to exploit opportunities in the international markets. The Boards also took cognizance of the common values and aspirations of both Banks, and their financial strengths, which together could combine to form a powerful force for the benefit of customers, employees, shareholders and the country.

These merger negotiations are likely to take time and the Boards of the two banks will keep stakeholders informed of developments as appropriate.