Public offering on the horizon with BOC Act amendment
The policy to draft amendments to the state-owned Bank of Ceylon Act, which was sanctioned by the Cabinet in August, allows it to go public, top officials said.
The proposed changes to the Ordinance No. 53 of 1938 aim to enhance the bank’s capital structure, broaden the range of its permitted activities, and strengthen its administrative framework. Accordingly, the Legal Draftsman has been directed to prepare a draft bill to facilitate the changes. In augmenting the capital structure as stated in the Act, there is potential for a future public listing of the bank, officials told the Sunday Times Business.
Many discussions about listing some of its ventures or a stockbroking subsidiary on the Colombo Stock Exchange (CSE) have occurred since 2010. However, these plans have not yet materialised for the main bank. The current amendments could pave way for a public offering of shares in the future, although no concrete plans for a full public listing of the main entity have been confirmed.
With the new Act amendments, the board of directors will make a decision on going public and what percentage should be listed, the officials said.
State-owned banks such as the Bank of Ceylon have traditionally been utilised to absorb losses from state-owned enterprises and to finance fiscal deficits, which has delayed pertinent reforms and led to high debt, which also contributed to the economic crisis. Direct and indirect government exposure influences the balance sheets of these entities, hindering them from fulfilling their primary roles, which are financial inclusion and addressing market failure in providing financial services to productive sectors in the economy.
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