Conflicts galore in SL banking sector
A recent media report shows that banking sector capital levels have slipped down drastically. The capital adequacy of most banks have fallen and as well as core capital. The record private sector credit growth showing big profits is short sighted by bank CEOs and boards.
One of the big banks with a history in the hills had sold the very property they started their business for a song. The buyer has happily turned it into a museum type hotel. The same bank is selling more of its family silver despite an attempt to raise a record amount of capital from shareholders. What are the shareholders doing without suing the directors? Another private bank has lost its way for lack of direction. NTB that was considered a niche bank has made more money than NDB and DFCC. What is wrong with these two development banks? Retired politicians and judges are appointed to banks, when banks need people who understand how banks make profit. It is a recipe for disaster. The three big private banks have only one banker per board. Most of them add no value to the bank. At a recent seminar a bank director did not know what the Basel accord really meant? Another director did not know what CAR stood for? This is the only country where we allow stock brokers, shareholders and businessmen with real conflicts to serve on bank boards and own finance companies.
We have a situation of a managing partner of a top audit firm overseeing the audit of another bank and at the same time chairing the audit committee of a bank. While other audit firms don’t allow their partners to serve on bank and finance company boards. What a disgrace?In another bank common sense prevailed and a partner of an audit firm was asked to leave. Minority shareholders and the depositors should go to the Central Bank or court or the Securities and Exchange Commission and demand that these conflicts be fully investigated. Those guilty must be fined or the bank should be fined. Bank higher ups are playing with public money, not their own. Expect the next unexpected disaster from the financial sector, like the garbage dump exploding.
A retired banker  Colombo Â