ComBank and IFC sign $ 75 m debt agreement
 IFC, a member of the World Bank Group, is investing $75 million
(approximately Rs 9.6 billion) in the Commercial Bank of Ceylon PLC
(ComBank), through a fund managed by its Asset Management Company (AMC),
to expand Commercial Bank’s operations and increase access to finance
for small and medium enterprises (SMEs).
“This investment with Commercial Bank is IFC’s largest investment in
Sri Lanka’s financial markets to date, and is expected to increase
access to finance for up to 16,000 small businesses and generate about
170,000 direct and indirect jobs by 2017 through lending to small and
medium enterprises,” a spokesman for the bank said.
“It is also IFC Asset Management Company’s first funding in South
Asia, and the largest subordinated debt issued for any bank in Sri
Lanka,” he said.
This investment through the AMC-managed IFC Capitalisation Fund will
qualify as capital to help Commercial Bank expand its operations,
allowing for small businesses across the country to gain better access
to credit.
The IFC Capitalisation Fund was established in 2009 by IFC and the
Japan Bank for International Cooperation. It invests in banks considered
vital to the financial system of emerging-market countries.
The investment will be through a 10-year subordinated loan to
Commercial Bank that will also help bring in new foreign currency
funding, and provide the Bank with capital to strengthen and expand its
operations.
“This investment is a milestone in the Sri Lankan banking industry
and will serve as a catalyst for other financial institutions to
structure similar facilities,” said Commercial Bank Chairman Dinesh
Weerakkody.
He said that the need of the country is to have development flowing
through all provinces and that it can only be achieved by supporting
SMEs around the country.
“This unique agreement provides us, one of the largest private banks
in the country, an enhanced opportunity to fund SMEs, a vital segment in
the economy, to facilitate healthy economic growth,” he said.
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