Five small state banks to be restructured
View(s):The Government is to restructure five small state banks in an effort to make it not only stable and resilient but also competitive, official sources revealed. The Public Enterprises Development Ministry has made a recommendation to the Cabinet Committee on Economic Management (CCEM) on the rationalisation of the activities of State Mortgage and Investment Bank (SMIB), Housing Development Finance Corporation (HDFC) Bank. Lankaputhra Development Bank (LDB) Sri Lanka Savings Bank (former Pramuka Bank) and Regional Development Bank (RDB).
The Ministry has suggested that these banks leverage synergies to improve their competitive advantage, make intermediation more efficient, reduce competition among them and cut costs by encouraging co-investment in joint facilities, a senior official of the ministry said. Measures will be taken to increase the critical mass (capital and asset bases) to strengthen the viability and resilience as well as capabilities, including capacity to innovate of these five banks. Operational effectiveness will also be enhanced by reducing overheads, particularly through branch rationalisation which served to reduce spreads. In the rationalisation process, there won’t be ‘forcible retrenchment’ of any staff member while a Voluntary Redundancy Schemes (VRS) will be offered.