Financial Times

Harry J moves to oust Amarasuriya
Unions oppose battle for Commercial Bank
By Duruthu Edirimuni
Harry Jayawardena’s battle for control of Commercial Bank has taken a new turn with the magnate calling for an extraordinary general meeting of the board to oust its chairman, Mahendra Amarasuriya, from the bank’s directorship, and bank unions saying they opposed the takeover bid.

“The chairman is appointed by the board and he (Jayawardena), as a shareholder cannot remove me from that position through an EGM, but any shareholder with a 10 percent stake can bring in a motion to remove a director,” Amarasuriya told The Sunday Times FT.

“I don’t depend on Commercial Bank for my livelihood, but when someone tries to manipulate there is very little I can do.” Industry analysts gave Amarasuriya a slim chance given Jayewardene’s political clout and shareholder power.They said that Jayawardena appeared to be trying to force the pace by his call for an EGM, possibly in an attempt to take control of Commercial Bank while a government in which he has considerable influence is still in power.

They said they believed that Jayawardene wants to get Amarasuriya out to set the stage for consolidation of Commercial Bank, DFCC and HNB. If Amarasuriya is removed from the directorship of the bank, he automatically ceases to be its chairman.

Amarasuriya said he has served Commercial Bank well for the past 17 years and that he had written to the Securities and Exchange Commission (SEC) to look into the matter as well as the Central Bank, and they had replied saying that they are looking into the matter.

Industry analysts said this is a text book case of scrutinising whether the regulators are doing their job. “They have been ‘looking at it’ and ‘analysing’ it for some time now and it is about time that they focus on ‘getting something done’, an industry analyst said.

Meanwhile, bank unions are getting restive over the takeover battle.
M.R. Shah, President, Ceylon Bank Employees Union and secretary of the union’s Commercial Bank branch said they opposed to Harry Jayawardena’s efforts to take control of Commercial Bank. “We will oppose him controlling the bank. We will strike, if really necessary,” he declared. “We will mobilise other banks as well, if necessary.

“We’re not concerned about the individuals. This is a prestige battle between two individuals. But it is a dirty battle that has a direct bearing on the bank and the industry as well in the long term. This type of controversy should not take place.”

Shah said Amarasuriya should not go just because Jayawardena does not want him on the board. He said the union had begun lobbying with Commercial Bank corporate management, the Central Bank and the Finance Ministry.

Industry analysts said that such blatant efforts at control by a shareholder in a sensitive industry such as banking should awaken the regulators, but others dismissed this by saying that Jayawardena is beyond the regulators and even the government, because of his extensive political connections together with shareholdings and wealth.

“The regulators cannot see a point in stopping Jayewardene, because they know that it is futile. He is above the law or he is clever enough to circumvent it as he so often does,” an industry analyst said.

Amarasuriya said the issue hotted up when DFCC’s former non Executive Chairman Dr. Nihal Jinasena, with the casting vote, voted for him at last year’s Commercial Bank AGM, when he was re-elected.

“He (Jayawardena) wanted me removed from Commercial Bank last year and Dr. Nihal Jinasena blocked his move,” he said, adding this was the crucial moment when Jayawardena became determined to remove both Dr. Jinasena and himself.

When asked whether he is opposing consolidation in the banking sector, Amarasuriya said that it is a very good concept to battle the regional and multi nationals in the industry, but it is damaging when one individual ‘controls’ a large chunk of the industry. “Consolidation is very good in today’s context when the industry has to stand up to international banks, but it should not be done as a monopolistic consolidation,” he said.

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