Colombo, Sri Lanka, March 7, 2003—
The
International Finance Corporation (IFC)—the private sector arm of the World Bank Group—has signed an agreement to purchase 15 percent of the voting shares of the Commercial Bank of Ceylon Limited (CBC) for a total of LKR965.25 million (about $10 million). This transaction marks IFC’s largest equity investment to date in the Sri Lankan financial sector.
The shares were purchased from the Sri Lanka Insurance Corporation, a government-owned institution, to facilitate its privatization and increase CBC’s private sector ownership.
IFC has also agreed to provide a $10 million long-term loan—the terms of which are currently being finalized—to expand CBC’s corporate lending business.
This strategic investment will enable IFC to support CBC in expanding its activities at a time when rapid consolidation is taking place in Sri Lanka’s financial markets. IFC will also help CBC broaden its product range and expand its activities in the South Asian region.
According to Karl Voltaire, Director of IFC’s Financial Markets Department, “IFC welcomes the opportunity to support dynamic financial institutions that operate in challenging markets and intends to work closely with CBC to introduce international best practice in the areas of corporate governance and risk management.”
Mr. Dimitris Tsitsiragos, Director of IFC’s South Asia Department, observed that, “IFC’s investment in CBC represents a vote of confidence in Sri Lanka’s economic prospects and recent improvements in the country’s macroeconomic and political environment.”
Mr. Amitha Gooneratne, Managing Director of CBC, added, “We welcome IFC, which shares our enthusiasm for CBC’s future as a strategic shareholder. IFC brings many advantages, including technical assistance and access to international best practices and we would like to leverage this relationship for the long-term benefit of CBC.”
CBC, with a 30-year history, is the second-largest private sector bank in Sri Lanka in total assets, currently LKR73 billion, and has a deposit base of LKR54 billion. CBC also has excellent operational, profitability, and corporate governance records and has been chosen Best Bank in Sri Lanka by a leading international publication for the past four years. In addition, it is considered the most advanced Sri Lankan bank in the use of information technology, delivering financial services via its branch and ATM networks across the entire country.
IFC finances viable private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through FY02, IFC has committed more than $34 billion of its own funds and arranged $21 billion in syndications for 2,825 companies in 140 developing countries. IFC's worldwide committed portfolio as of FY02 was $15.1 billion for its own account and $6.5 billion held for participants in loan syndications.
