The Central Bank (CB) is gearing to call for Expressions of Interest (EoI) early next week to re-capitalise the Seylan Bank , according to senior CB officials.
"We are currently finalizing the EOI procedure and also in the process of discussing with the Attorney General's Department to clear the legal aspects," an official who did not wish to be named told The Sunday Times FT.
He said CB is targeting to advertise the process on Tuesday or Wednesday in the newspapers. He explained the offer will be made to attract 'strategic' partners to Seylan. "CB wants to strengthen Seylan's capital position and to do it in a transparent manner. This is the reason for this strategy,” he added.
The official explained that CB is attempting to issue fresh shares to the strategic partner, but said the amount of shares issued depends on the money they will bring in. "The amount required is still being discussed," he added.
In early January, the Central Bank executing the authority vested upon them under the Monetary Act carried out a board reconstitution and appointed a new management to manage Seylan.
He said the regulator’s move to appoint Bank of Ceylon to manage Seylan was done in a bid to stop the imminent danger of a run on Seylan. “At the right time we managed to step in,” he said.
He said that several parties were interested in Ceylinco Chairman Lalith Kotelawala's 23% stake in Seylan in early January, but the EoI that will be called should not be confused with this stake.
“Mr. Kotelawala late last year said he wants to sell his shares at Seylan to settle depositors at the crisis hit Golden Key, which faced a run last December. That is a separate issue,” he said.