Friday, 04 June 2021 10:08

HNB struggles to appoint its Chairman and two directors Featured

The country’s second-largest private sector bank, HNB is struggling e for seats on its Board in what analysts see as a four-way fight, involving business tycoon Harry Jayawardena, the Finance Ministry, the Captains Group, and the latest entrant Browns investment in the form of Ishara Nanayakkara.

The effects of the internal battle have spilled over to the general public with some people even resorting to using WhatsApp, sending anonymous mails and also slandering Director and veteran banker Nilantha de Silva and Acting Chairman, the highly-respected corporate lawyer Dr. Harsha Cabral PC.

“These kinds of cheap tactics are disgraceful and must not be resorted to by people aspiring to sit on private sector bank boards,” opined analysts.

Recently, Dinesh Weerakkody stepped down as Chairman and the battle for a seat on the HNB Board has since intensified. At present there are 11 Directors on HNB Board and two seats are vacant.

It is alleged that Finance Ministry Secretary S.R. Attygalle through Sri Lanka Insurance (13.3% shareholder) wants Samantha Rajapaksa, a former Bank of Ceylon Director during the previous administration, and Nihal Jayawardena PC appointed as Directors.

Ishara Nanayakkara (via Browns Investments owns a 9.9% stake in HNB) wants his LOLC Group Managing Director veteran banker Kapila Jayawardena appointed.

Both Captains (whose stake is around 8.4%) and Jayawardena (owning 17.8%) have one director each. Jayawardena, who has had two directors for several years in the past, wants his second director.

The grouse that Jayawardena has is that though he owns nearly an 18% stake, his voting rights are restricted to 10% whilst the State institutions can freely work together, “acting in concert”.

The State institutions collectively have around 23% of HNBs voting shares (Sri Lanka Insurance Corporation (13.3%), EPF (9.75%), ETF (1%)), but are not restricted in their voting rights.
This has been raised in many public forums, but the Central Bank has ignored the concerns raised by several shareholders to have a uniform policy.
Analysts said in certain banks such as NTB and Union Bank this rule does not apply for the large shareholders or they have been given extended time.

Analysts also pointed out that many governments unfortunately have interfered in private sector banks by using the State-Owned Enterprises (SOEs) and the EPF shareholding to either remove or appoint directors.
They have or attempted to turn them unfortunately into State-like banks and politicising the private banks.

“The politicisation of private banks needs to stop for these banks to take independent lending decisions,” they added.

 

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