Sri Lanka: News briefs

Bailout for Seylan
According tot the Central Bank, the Seylan Bank will be bailed out with the help of money from state institutions. A bid from a private investor was rejected because it did not meet ownership limits. The banking regulator, said in a stock exchange filing that Seylan will issue shares to raise three billion rupees with support from state institutions. Lanka Orix Leasing Company submitted the only bid to buy a 33 percent stake in the Bank. The Central Bank said the offer "has not fulfilled all the parameters" in relation to "ownership limits" and it had not accepted the bid. At least one prospective bidder has said a 33 percent stake was not enough because any strategic buyer would eventually want to merge with the bank. The regulator put Seylan under the wings of state-run Bank of Ceylon and wanted a new investor to buy into it when a run on Seylan's deposits was triggered by the collapse of an unregulated firm in its owning Ceylinco group.

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MILLANAK Price Index
The composition of the companies in the MILANKA Price Index with effect from 1st of July 2009 is as follows:
BANKS, FINANCE & INSURANCE: Ceylinco Insurance Co. PLC, Commercial Bank of Ceylon PLC, DFCC Bank, Hatton National Bank PLC, Nations Trust Bank PLC, Seylan Bank PLC
BEVERAGE, FOOD & TOBACCO: Distilleries Company of Sri Lanka PLC, Cargills (Ceylon) PLC, Ceylon Tobacco Co. PLC
DIVERSIFIED: John Keells Holdings PLC, Richard Pieris PLC, Hayleys PLC
MANUFACTURING: Chevron Lubricants Lanka$ PLC, Kelani Tyres PLC, Tokyo Cement Co. (Lanka) PLC
TELECOMMUNICATIONS: Dialog Telekom PLC
HOTELS & TRAVELS: Ceylon Hotels Corporation PLC
LAND & PROPERTY: Touchwood Investments PLC, Overseas Realty (Ceylon) PLC
POWER & ENERGY: Lanka IOC PLC, Vallibel Power, Erathna PLC
CHEMICALS & PHARMACEUTICALS: Chemical Industries (Colombo) PLC
CONSTRUCTION & ENGINEERING: Colombo Dockyard PLC
OIL PALMS: Bukit Darah PLC
TRADING: Environmental Resources Investment PLC
New Inclusions for the 2nd Half 2009: Bukit Darah PLC, Ceylon Hotels Corporation PLC, Ceylon Tobacco Co. PLC, Environmental Resources Investment PLC, Overseas Realty (Ceylon) PLC, Seylan Bank PLC, Tokyo Cement Co.(Lanka) PLC
Exclusions from the 1st Half 2009: ACL Cables PLC Balangoda, Plantations PLC, Ceylon Leather Products PLC, Lanka Orix Leasing Co. PLC, National Development Bank PLC, People's Merchant Bank PLC, The Colombo Fort Land & Building Co. PLC

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Tourism thrust

The island has launched an initiative to provide better access and facilities at tourist attractions in an effort to draw more visitors to the island, following the end of the 25 year of war. Secretary for the Tourism Ministry K.A.D George Michael says the government had allocated funds to improve basic infrastructure such as water and sanitation at tourist sites to cater to both foreign and domestic visitors. This was because basic facilities such as accommodation, drinking water and toilets at many sites were woefully inadequate. Tourism, both foreign and domestic, has the potential to give a fillip to the local economy, providing employment to villagers as well as improving their incomes, he said while addressing a recent news conference in Colombo.
The end of the 25-year ethnic war with the defeat of Tamil Tigers last month meant there was great potential to revive tourism, which had long been in the doldrums because of the violence, Micheal said. The government aims to attract 1.5 million tourists to the island by 2010. Total tourist arrivals in to Sri Lanka in 2008 were 438,475, down 19.9 percent from the previous year, according to tourist board statistics. The tourism thrust revolves around a new brand called 'Sri Lanka, small miracle' aiming to promote the island's distinct attractions in a new era free from war. The new initiative also aims to promote attractions in the north and east, which had been ravaged by war but which also have some of the island's best beaches. Michael said the ministry was in touch with government officials in the north and east, trying to identify potential tourist sites and seeking land suitable for tourism.


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NTB on track despite breach
Sri Lanka's Nations Trust Bank, a unit of the John Keells Holdings group, is probing a breach of operating procedure, but the bank is on track to meet half year profit targets, an official said. "As far as we are concerned we are on track to make profit targets in the half year," NTB chief executive Zulfiqar Zavahir said. "If there is anything to provide we will provide." Zavahir said the bank was looking into a "breach of operating procedure". Provisions would be made in the current quarter accounts. He said the bank was well capitalized in excess of Central Bank requirements. Analyst says the bank was on track to make large bond profits this quarter due to a steep fall in interest rates in the country.
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New credit card from DFCC
DFCC Vardhana Bank has launched a credit card targeting high-end customers and to improve access despite difficult market conditions owing to lower consumer spending and high taxes. DFCC group chairman Rajan Brito told a news conference "We're now moving towards a cashless society and the bank has started by introducing credit cards,". They also hope to introduce debit cards soon". Despite news reports that banks were making huge profits, Brito said, banks were facing difficult times, with rising bad loans and too much competition. Banks also had to cope with high taxation with two forms of tax even on credit cards. "This is the only country in the world where you have double, or even triple tax on the same source of income," Brito said. "In other countries people are only taxed once." LG Perera, chief executive of DFCC Vardhana Bank, said the bank went ahead with the launch of a credit card with Visa, a global card service provider, despite the economic slowdown as it was targeting a less risky, high-end customer base. DFCC has also sought government approval to open five branches in the north and east where an economic revival is expected with the end of the 25-year-old ethnic war. DFCC Vardhana's asset base has grown to Rs.20 billion over the last five years and it now has 46 branches and 75,000 customers.
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