Govt. considers listing of major state firms

Reuters: Sri Lanka is considering listing two state-owned banks and an insurance company next year, by selling stakes of at least 10% in each, government, regulatory and exchange officials told Reuters on Wednesday.

Bank of Ceylon, the largest lender in the island nation, People’s Bank, and Sri Lanka Insurance are all earmarked for possible sales, the sources said.

“The idea is to list at least 10% of the stakes in each institution by the first half of next year,” a top government official, with knowledge of the initial discussions on the matter, told Reuters.

“We want to increase the liquidity in the market.” Regulatory and exchange officials confirmed the government was considering making the sales, both to raise money to meet debt obligations and also to improve market liquidity.

Sri Lanka is planning to reschedule some government loans to ease its heavy debt repayment burden over the next two years.

Approving a $ 1.5 billion loan to Sri Lanka last year, the International Monetary Fund (IMF) urged more reform of state- owned enterprises.

Bank of Ceylon posted a 43% rise in its profit to Rs. 24.8 billion ($ 162.5 million) last year, while Sri Lanka Insurance recorded more than tripled its profit to Rs. 12.7 billion. People’s Bank recorded a 1.1% fall in its profit after tax to Rs. 7 billion for the financial year ended on 30 June.

“The Government might want to list other non-strategic enterprises before considering listing these firms. This could be more of a revenue measure,” said Shiran Fernando, an analyst at Colombo-based Frontier Research.

Trade unions oppose any privatisation as it could result in redundancies. Protests have dissuaded successive governments from listing state firms in the past, though the listing of Sri Lanka Telecom in 1997 was a notable exception.