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Thursday, March 3, 2011

Seylan Bank to raise Rs. 4.7 b via Rights

1 for 3 issue proposed with voting at Rs. 75 and Non voting at Rs. 35

Following its impressive turnaround in 2010, Seylan Bank is bracing to get aggressive as it plans to raise Rs. 4.7 billion via a Rights Issue.

Board of Directors has resolved to recommend a one for three Rights Issue on voting shares at Rs. 75 each and at Rs. 35 on non-voting shares. The move subject to regulatory and shareholder approval will issue 43.33 million voting shares and 41.18 million non- voting shares.

On Tuesday Seylan’s voting shares closed at Rs. 87/70, down by 40 cents after trading between high of Rs. 89 and a low of Rs. 87.30. Non voting shares closed at Rs. 44.70, down by one rupee whilst it peaked to a high of Rs. 47 and a low of Rs. 44.50.

Via the Rights money, Seylan Bank will increase its Tier 1 Capital as well as boost long term funds to match long term lending as well as facilitate future restructuring and expansion.

As at end 2010, Seylan’s Tier 1 capital was Rs. 10.3 billion whilst total capital base was Rs. 12 billion. Its total capital adequacy ratio as a percentage of risk weighted assets was 11.06% marginally higher from the minimum 10% requirement. Core capital adequacy ratio was 9.56%, above the 5% minimum requirement. These figures in 2009 were 12.30% and 10.25% respectively.

In 2010, Seylan Bank posted a net profit attributable to equity holders of Rs. 1.2 billion, up from Rs. 555.3 million. Group pre-tax profit was Rs. 1.95 billion, up from Rs. 906 million in 2009. After tax profit was Rs. 1.16 billion as against Rs. 421 million last year. Its net interest income rose by 12% to Rs. 8 billion.

Bank’s asset base grew by 13% to Rs. 150 billion whilst that of the Group rose by 10.4% to Rs. 151.5 billion. Deposit base of the Bank grew by 15% to Rs. 10.4 billion whilst net loans and advances grew by 13% to Rs. 91 billion. Equity capital and reserves rose by 14% to Rs. 12 billion at Bank level.

Seylan VRS to cost Rs. 700 m; Shed 250 heads

Seylan Bank also announced an uniform Voluntary Retirement Scheme (VRS) for employees of all categories aimed at reducing the employee base by 250 at a cost of Rs. 700 million.

Seylan as at 31 December, 2010 had 3,622 employees at the Bank, lower by 3% from 2009’s figure of 3,733.

The Bank said consent of the Commissioner of Labour – Industrial Relations had been obtained for the VRS which will be offered this month.

source - www.ft.lk