Sunday June 22, 2008
Financial Times

HNB and DFCC joint venture investment bank launched

The HNB and DFCC joint venture investment bank is not a stepping stone to a fully fledged merger by the two entities, despite them sharing common shareholders, according to top officials in both the banks.

“Right now we are focused only on this venture. There is nothing such as a merger,” Rajendra Theagarajah, HNB Managing Director and Acuity Director said on the sidelines of the launch of Acuity Partners (Pvt) Ltd, the new joint venture.

Some banking industry analysts noted that due to business baron Harry Jayawardena holding a majority stake in the two entities, the new venture can be a start to something big. When asked whether a merger could be possible in the future due to common shareholders in both DFCC and HNB, Nihal Fonseka, General Manager DFCC who is also the new company’s Chairman, noted that this is not a criteria to merge. “There are also other large shareholders in both these companies. There are possibilities for other such ventures, but we have not spoken about a merger,” he added.

He noted that the merger of the subsidiaries of the institutions will be done within a year. He also said that Acuity will be located separately from the two banking institutions. "Apart from the synergistic effects of bringing the individual companies together, the merger would release valuable regulatory capital and enable savings in operational costs," Mr. Theagarajah said.

The rest of the Acuity director board consists of Executive Director Ray Abeywardena and Managing Director Jayantha Perera. The new venture will take on the existing corporate finance and capital markets businesses of DFCC and HNB. It will also take over and be the Group Holding Company for the other subsidiaries of the two banks involved in the equity and debt capital markets, i.e., DFCC Stockbrokers (Pvt) Ltd., HNB Stockbrokers (Pvt) Ltd. and the primary dealership business - HNB Securities (Pvt) Ltd.

The company will be looking at the possibility of moving out into the region and into the Maldives, South India and Bangladesh.

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