Message: getimagesize(http://static.ft.lk/ftadmin/wp-content/files_mf/http://www.ft.lk/ftadmin/wp-content/uploads/file/hamper-right-p.jpg): failed to open stream: HTTP request failed! HTTP/1.1 403 Forbidden
Line Number: 59http://static.ft.lk/ft_logo.png"/>
Comments /4666 Views / Thursday, 8 September 2011 00:46
Top blue chip and consumer brand Cargills (Ceylon) Plc is diversifying into banking, a move which the industry feels already crowded but Central Bank justified its provisional approval saying in the futuristic context the country isn’t overbanked.
Cargills yesterday announced that the Central Bank has issued a provisional approval to set up Cargills Agriculture and Commercial Bank (CACB), subject to fulfilling routine terms and conditions. The new venture will be set in partnership with Cargill’s parent CT Holdings pursuant to a joint application made.
Cargills sources declined to comment beyond the brief initial statement issued yesterday. Post announcement, Cargills saw its share price rise to a high of Rs. 239.80 before closing at Rs. 229.90, up by Rs. 9.10. CT Holdings peaked to a high of Rs. 199 before closing at Rs. 196, up by Rs. 11. CT Holdings already has exposure to financial services with a stock broking arm, investment banking and fund management.
Analysts noted that the proposal cum the business model it had proposed to the Central Bank would have factored in the current notion within the industry that Sri Lanka is overbanked hence differentiate itself and serve an unmet larger need.
“To provide provisional approval the Central Bank must have seen a model which is different or not imitative of what is currently prevalent within the industry,” analysts opined.
Sri Lanka at present has a banking network of 31 comprising 22 licensed commercial banks (LCBs) and 9 licensed specialised banks (LSBs). There are nearly 6,000 bank branches and other outlets whilst the banking density (number of bank branches per 10,000 persons) is nearly 10.
Central Bank Governor Nivard Cabraal told the Daily FT yesterday that given the future development and outlook of post-war Sri Lanka, there is larger space for banking. “We give licences for the future. Given the country’s growth projections and doubling of per capita in the future, there is enough space for more banks,” Cabraal said.
He reiterated that over the next five years a doubling of bank lending is envisaged from the current Rs. 2 trillion. “If the existing banks can do it, it is well and good but we have to support new initiatives in the banking sector,” Central Bank Chief emphasised. In response to industry need for greater consolidation, Cabraal said that the Central Bank will encourage banks who want to do it but suggested that there was more space for more banks in the future of Sri Lanka.
Cargills has been styling itself as a trusted brand in Sri Lanka given its extensive reach via the country’s biggest supermarket chain numbering 163, and analysts anticipate it to harness that strength and build a banking or financial services brand that the masses can trust at rural level. At present in select Supermarkets Cargills has accommodated the Commercial Bank to operate banking facilities and going forward this is unlikely to be a permanent feature. The Central Bank recently allowed Laugfs to operate money exchange units in its supermarket outlets.
Analysts said the name chosen to include Agriculture points to Cargills’ emphasis to serve the rural farmer and perhaps likely to assume itself the role of a barefoot banker, a phrase which was attributed to the late veteran banker N.U. Jayawardena.
Cargills’ foray into banking comes hot on the heels of the company investing a record Rs. 2.5 billion in FY2011 in acquiring Kotmale Holdings, McCallum Breweries of Three Coins fame and Dian Biscuits as part of its aggressive push to expand in the food and beverage industry.
Whilst Cargills’ keenness to tap leisure and up-market shopping sector had been on the cards, its entry into banking wasn’t factored; hence the move has stunned banking circles and other corporates. In its 2010/11 Annual Report Cargills only said “The year ahead would see your company playing an even more significant role in building on its core strength of food and nutrition whilst investing into key growth sectors of our country. Your company believes in a bright and prosperous future for Sri Lanka and is now well positioned as a trusted partner of Sri Lanka to spearhead that journey of success.”
In the financial year ended 31March, 2011, Cargills recorded an excellent performance with profit after tax crossing the Rs. 1 billion milestone, up by 54% from the previous year. The Group consolidated turnover exceeded Rs. 37 billion, reflecting a 20% growth. Profit before tax rose by 41% to Rs. 1.4 billion and after tax profit attributable to shareholders was Rs. 1.1 billion, up by 53% over FY2010.
Established in 1928 to operate in movie production and exhibition, the Ceylon Theatres Group is now operational in the supermarket business, restaurants, food, manufacturing, real estate and stock broking. The group has acquired interests in ceramics, tiles, plantations and packaging and has ventured into financial services.
25 March 2017
Yesterday’s FT article on the CSE road show in Melbourne, appealing to expat Sri Lankans, triggered this. Emotional pleas and guilt appeals may be good enough to generate some charity or philanthropy (and do not confuse it with im...
24 March 2017
IT and Commerce Minister of Telangana State Minister Rama Rao speaking at the Sri Lanka Human Capital Summit in Colombo said that the Telangana Academy for Skill and Knowledge created a platform between Government, academia and industry t...
24 March 2017
Big match season lays bare the tribalism and sexism in our society Big match season brings out the best in us and also the worst, I think. The camaraderie and the loyalty of the old boys and the enthu...
24 March 2017
I don’t often quote the United Nations (UN). Not because they don’t say sensible stuff. But because their sound bites are not as memorable as that which their opposition – rogue states, global terrorists – says. Because the...
Niroshan on Govt.’s growth, transparency and visionary policies at CSE Sydney forum
Sri Lankan insurance industry yet to realise full potential
Women entrepreneurs empowered by Coca-Cola prove they are ‘Bold for Change’
Celebrating International Women’s Day at Shangri-La’s Hambantota Resort and Spa