Prime Minister Ranil Wickremesinghe on Tuesday said he has asked the Central Bank (CB) to submit a ‘complete’ report on the issues faced by a section of the depositors at UB Finance.  Responding to a request in Parliament by MP and JVP leader Anura Kumara Dissanayake for an investigation into some issues at UB Finance, [...]

The Sunday Times Sri Lanka

PM calls for ‘complete report’ on depositor woes at UB Finance


Prime Minister Ranil Wickremesinghe on Tuesday said he has asked the Central Bank (CB) to submit a ‘complete’ report on the issues faced by a section of the depositors at UB Finance.  Responding to a request in Parliament by MP and JVP leader Anura Kumara Dissanayake for an investigation into some issues at UB Finance, the PM said “there are some important facts (issues). Once I receive the report I will make a statement in the House”.  Mr. Dissanayake said that around eight years ago when the Ceylinco Group collapsed, one of its companies Finance and Guarantee Company (F&G) too become inactive. Due to these problems, depositors of the company were unable to withdraw their deposits and faced a lot of injustice.

The depositors took their case to the Supreme Court. The CB first appointed the Merchant Bank and then the Union Bank to manage the affairs of F&G. Thereafter the Union Bank obtained the ownership of F&G and a company was established by the name – UB Finance.  On the instructions of the CB, UB Finance Co undertook to issue shares to the depositors of the former F&G for which certificates were given to the depositors, Mr. Dissanayake said, tabling some of these certificates in the House.  However, he said, the company has failed to carry out the instructions of the CB for three years. The main income of the majority of the depositors of the F&G was the interest on the deposits.

Once the company collapsed as a result of their not getting their income they were subjected to heavy pressure. Due to a loss of income over a long period about 50 of these depositors have committed suicide. Further, about 80 per cent of these depositors are elderly persons who had deposited their old age pension benefits.  “Due to the blockage of their income avenue they were unable to meet their medical expenses, children’s work and day to day expenses and thus they have become extremely helpless. UB Finance has not fulfilled their pledge and not paid back their deposits and interest and also have not registered the shares in the share market. At least if they have been registered in the share market, they would have been sold in the share market.

Now they are keeping only the papers as shares and they are not receiving any interest. They are not getting any returns. They cannot claim that. They are simply waiting with only the paper in hand,” he told Parliament.  The CB has repeatedly informed the company to register the shares as a registered company in the share market nothing has happened.  “I saw (earlier in the newspapers) large advertisements that UB Finance is earning large incomes and they are getting large returns. If that company has kept a large sum of money of these depositors and if the company is earning profits and getting huge returns, why is this injustice being meted out to the depositors is the question that arises?”

“UB Finance under the supervision of the CB has not given deposits, returns or interest as pledged and neither has it taken steps to register their shares in the share market. No action was taken for not fulfilling pledges. Once the pledges are not fulfilled the CB should have taken action. There is no such action taken.”  He said the depositors say that UB Finance at the beginning has sold lot of shares and obtained huge sums of money and it is suspected that the shares of this company have been sold.  “Do you know that during the eight years these depositors have not received their deposits, returns or interest? What are the agreements between the CB and the Union Bank at the time of handing over the management of F&G,” he asked.

Right of Reply
“Desperate UB Finance depositors say Central Bank has failed to deliver on its promises”
UB Finance has sent a statement to the Business Times in response to a report which appeared last week in the newspaper under the above heading.
Due to limited space, the company’s version of events in summarised form is presented below:

  •  The Finance & Guarantee Co. Ltd. was a former Ceylinco Group Company, which experienced a severe financial crisis upon the collapse of the Ceylinco Group . 
  •  The company was taken under the wing of the Monetary Board of the Central Bank of Sri Lanka (CBSL) which restructured the balance sheet of the company by converting 50.66 per cent of the existing fixed deposits into ordinary non-voting shares . 
  •  Had the conversion and restructuring not been done, the company would have collapsed leaving the depositors, employees, customers and other stakeholders completely destitute . 
  •  As per the restructuring plan engineered by the CBSL the exit mechanism proposed for the former depositors was to sell their shares on the Colombo Stock Exchange (CSE) once the company was listed. 
  •  At the request of the CBSL, Union Bank of Colombo PLC together with ShoreCap II invested Rs.1.15 billion and acquired the company. 
  •  The company was restructured, rebranded & launched as UB Finance Co. Ltd. in June 2012. 
  •  Post-acquisition, the balance deposits not converted to shares were refunded in full upon maturity along with interest in a timely manner to the depositors. 
  •  Upon taking up the management of the company the new management faced many serious issues due to fraudulent acts and mismanagement by the previous management. 
  •  One such issue was the incorrect and incomplete ordinary non-voting shareholder register handed over by the previous management which had to be completely rectified by the new management. 
  •  The company is currently on an extremely positive trajectory and has achieved phenomenal goals and targets in a very short period of time. 
  •  UB Finance submitted an application to list the company on the CSE. 
  •  The company is currently awaiting approval of the CBSL and the CSE.

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