CBEU vows to paralyse banking sector over state banks divestiture
View(s):The Government, ignoring opposition from trade unions, has permitted two state banks – the Bank of Ceylon (BOC) and the Peoples Bank (PB) – to sell 10 per cent each of its stakes in the Colombo Stock Exchange with the aim of raising capital via the equity market, officials said.
This move proposed in the 2018 budget is aimed at providing an option for bank employees to become shareholders but they would be prohibited from selling their shares.
The sale of shares of these banks came under fire of bank trade unions in the recent past with officials said pointing that Cabinet approval had been given at a meeting on October 9.
The Treasury has infused Rs. 5 billion each as equity to BOC and PB as a measure to assist the bank to meet the international Basel III standards.
The Government will continue to maintain its controlling stake of two state banks, without pumping any more money from the Treasury into these banks, a senior official of the Finance Ministry told the Business Times.
He noted that the listing of minority stakes of 10 per cent each of the two banks would be a major boost in capital market in the country.
Vehemently protesting against the move, the Ceylon Bank Employees Union (CBEU) has vowed to paralyse the country’s banking sector, if the government goes ahead with the 2018 budget approval.
CBEU President Channa Disanayake told the Business Times that the government has bowed to the dictates of the International Monetary Fund committing itself to raise money to meet debt obligations and also to improve market liquidity.
He noted that this move to increase the liquidity in the stock market is also aimed at rescuing it from possible crash.
Issuing shares will be the initial step to sell the state banks, he said adding that the CBEU will take trade union action against the move.
However he disclosed that there was no public announcement made relating to the cabinet approval given to this proposal.
The CBEU has already sent a letter to Finance Minister Mangala Samaraweera explaining the position of the trade union with a strong warning of trade union action if the government is failed to withdraw the 2018 budget proposal, he added.
According to latest Treasury data, the BOC has continued its lead position in the Sri Lankan banking sector with the largest asset base of Rs.1.9 trillion by the end of August 2017.
The deposit base of the bank has recorded an increase of 12 per cent to Rs.1.4 trillion by the end of August 2017 compared to the deposit base of Rs.1.2 trillion as at end of 2016
The People’s Bank’s asset base has increased 13 per cent to Rs.1.47 trillion as at the end of August 2017, from Rs.1.3 trillion as at the end of 2016.
The deposit base increased by 9 per cent to Rs.1.18 trillion by the end of August 2017 compared to Rs.1.08 trillion as at the end of 2016.