ADB keen on investing in banks | Sunday Observer

ADB keen on investing in banks

The Asian Development Bank (ADB) is keen to work with the banking sector in Sri Lanka and is exploring opportunities in private and public banking sectors, a senior ADB official said.

“We have a lot of opportunities to support the private sector in Sri Lanka and enable them to grow; by providing debt, equity guarantees, and capacity building projects,” Director Private Sector Financial Institutions Division, ADB, Christine A. Engstrom told the Sunday Observer. Talking about the ADB’s interests in private sector funding in Sri Lanka, she said the bank already has some experience, working with the banking sector in Sri Lanka, especially with DFCC Bank and HNB.

Some of the work the ADB has done in the banking sector include capacity building and infrastructure development activities.

In Sri Lanka, the ADB started negotiating with the Hatton National Bank to invest USD 50 million, taking a stake of up to 9.9 percent of the bank’s ordinary voting shares.

Engstrom said that the negotiations are still on and that they are still interested in this deal. Sunday Observer learns that the Sri Lanka government too is keen to see ADB playing a major role in the local banking sector as it is a value addition to the sector.

“The government also wants to support the HNB/ADB discussions and finally to see the transaction is successful,” the official said. Overall, ADB has set an ambitious target of scaling up total assistance for the private sector to 50% of OCR (ordinary capital resources) financing by 2020, under its Strategy 2020 Plan.

This target included both direct private sector operations, which included ADB’s equity investment, non-sovereign lending and guarantees to private sector companies, as well as private sector development activities. Engstrom said that Sri Lanka’s banking sector is vibrant.

“HNB is only one of the banks we are interested in. We are open to other proposals as well,” she told the Sunday Observer on the sidelines of the Annual Meeting of Board of Governors of the ADB in Yokohama early May.

She added that ADB is building on private sector operations in member countries.

“Our message is pretty simple - the ADB is there to provide value addition through funding, debt funding as well as equity support.”