Financial Times

NDB an attractive option for a merger

By Duruthu Edirimuni Chandrasekera

NDB Bank is not averse to a merger with a bank like Commercial Bank (CB), according to a top NDB official. "The way to get to be a bigger bank is through a merger and we have always believed in it. The environment is now far more favourable for a merger and (the banks) need to look far more seriously into this,” Eran Wickramaratne, CEO NDB told the Sunday Times FT.

He said that NDB is looking to merge 'up' and not 'down' and as a result they are looking to merge with a 'bigger bank' (like CB). "As it is NDB is an attractive bride," he said.

NDB tried to merge with CB in early 2007, but this attempt did not materialise as CB officials pointed out that the merger didn’t work as NDB had a highly centralised culture as opposed to the decentralised culture at CB. CB’s Committee of the Executive Officers' Association said in a letter at the time that such a negative impact far outweighs the benefits like size, raising capital adequacy and share structure.

NDB’s non performing loan (NPL) portfolio during the last six months has declined from 3% to 1.9%, but the loans have not grown. "The first half of 2009 NDB's loan book has not grown due to the quality of assets reducing drastically during the last six months. But during the next six months it will as project financing projects that have been in the pipeline are beginning to draw down," Mr. Wickramaratne said.
He also noted that NDB has the lowest cost to income ratio (at 41%) in the industry as at June.

Therefore our operating model, where the back office is centralized is working very well.”
When asked whether NDB has any plans for the Rs. 3 billion excess capital it has, he said the bank is strongly positioned to expand its balance sheet and take on more loans because of this.

"There is a capital write-off of US $ 7 trillion in the world and US$ 4 trillion of this is in the banking sector. So in this situation we are well positioned as we have the capacity to grow," he said. NDB, which was originally a development finance institution, merged with NDB Bank, its commercial banking subsidiary in August 2005 to become a commercial bank.

Top to the page  |  E-mail  |  views[1]
Other Financial Times Articles
Lanka’s forex reserves surge
F&G directors meet in Welikada prison on payment plan
Top investor Jim Rogers visits Sri Lanka
SLIC board's random decisions irk staff
Police caught flat-footed on public-smoking arrests
SLT facing an internal crisis
Kotelawala, GK directors meet at Central Bank
COMMENT - Jim Rogers was here!
Fallacy and the reality of IMF Standby Arrangement for Sri Lanka
CIMA/ICMA - Accounting qualification battle rages on
‘Small Miracle’ Tagline is no more
HNB opens commercial operations for remittances from Canada
Terminations, VRS and workforce restructuring on the rise
Developing nation consumers prefer mobiles for Internet access
Call for more engineers to be produced
Distilleries profits drop sharply
Summa Navaratnam ends mercantile career of over five decades
Managing properties in Sri Lanka and overseas as local industry takes off
The new silver frosted proof coins
Pakistan Civil Aviation hires MTI Consulting
Improved agricultural knowledge access through IT
Sri Lanka's banking technology leads region
SIA to fly to Melbourne with A380
Textured Jersey to supply fleece fabric for Pink, the No.1 lounge wear brand
New war strategies succeeded against LTTE
Dispute once again over SLT Tariffs
Lalith W wants the Public Service to be courteous
Seven judge SC bench to hear PBJ case
Garment exports down for second month in a row
Garment factories invited to go North
Bilingual education system showing good results – Education Ministry
Fewer students attracted to marketing field this year
EFC study on training needs of SMEs
Education opportunities in New Zealand
UK Sri Lankan Business Directory launched
Micro Cars to manufacture container trucks and tractors for the North and East
Upcoming IT park: Orion City ties up with Suntel
‘Garments without Guilt’ campaign gets another global award
A wise call on Colombo South Port
Competitors threaten to stop interconnect to Airtel
Sukuk certificates to attract Muslim millions for post-war development
HNB shows slight increase in profits
CCC receives applications for this year’s CSR awards
Allianz Lanka continues growth performance into 2Q09
SriLankan Airlines saves Rs. 6 billion through cost restructuring measures
Privatisation: Myth and reality
Singer net profit down for 1H09 and 2Q09
Lankan entrepreneur nominated for biz award
400 stalls at 2009 Colombo International Book Fair
NDB an attractive option for a merger
Local companies yet to face true global competition
LankaClear net profit drops in 2008/09 Financial Year
Huge remittances through Seylan Bank


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2009 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution