Central bank of Sri lanka has called for proposals from investors to invest 5.7 billion rupees (about 50 million US dollars) to take a 33 percent stake in Seylan Bank, part of the troubled Ceylinco group.
Expressions of interest (EOI) have been invited from local or foreign parties interested in becoming a “strategic partner” of Seylan Bank, the island’s fifth largest commercial bank in terms of assets with a seven percent market share.
Apart from the initial capital injection, a further investment in debentures of Seylan Bank is also expected, the regulator said in a newspaper advertisement that called for EOIs
The central bank in December 2008 put Seylan Bank under the management control of state-owned Bank of Ceylon after a “major scam” was uncovered within an unlisted firm of the Ceylinco group to which Seylan belongs, it said.
Seylan Bank’s main shareholder, Ceylinco group chairman Lalith Kotelawala, has offered to sell his stake in the bank to raise funds to pay off depositors of Golden Key Credit Card Company, the unlisted group firm that collapsed late last year.
Kotelawala has been remanded over fraud allegations at Golden Key and has offered to sell other group assets to raise funds to repay depositors.The central bank advertisement said the deadline for submitting EOIs for the Seylan Bank stake is April 15, 2009 with investors being notified of the outcome of their applications by April 24 and selected investors being expected to make formal bids by May 7.
A final decision by the central bank will be made by May 20 and the investor is expected to inject fresh capital within two weeks of being chosen, the central bank said.