- Depositors to be repaid within two years in three tranches
After discussions and negotiations with the Central Bank, Lanka Credit and Business Ltd. (LCBL) has acquired City Finance Corporation Ltd the company said in a statement yesterday.
The acquisition was made on 19 April. Before that, CBSL had conducted an in-depth evaluation of LCBL and had made an assessment of the future business plan of LCBL to restructure and turn around City Finance Corporation Ltd. Initially LCBL made a capital infusion of Rs. 565 million. LCBL also reached an agreement with CBSL to repay existing deposit liabilities and accrued interest up to 31 March 2017 within two years in three tranches.
Under this agreement, 10% of deposits and interest liabilities will be repaid on or before 31 May.
As much as 45% of deposits and interest liabilities will be paid on or before 30 April 2019, with the balance 45% on or before 30 April 2020.
Interest for the existing deposit liabilities will be paid at 4% per annum on a monthly basis. The company also said it would obtain a listing on the Colombo Stock Exchanges on or before 31 March 2020. With the acquisition by LCBL, City Finance Corporation Ltd. became the first Southern-based finance company, catering to the retail and middle markets through Financial Products of Leasing, Hire Purchase, Mortgaged Loans, Pawning, Micro Finance and the acceptance of foreign current deposits.
At present, LCBL operates its head office in Galle city and branches in Karandeniya, Mirissa and Pelawatta in the south of Sri Lanka. LCBL expects to expand its branch network in the areas of Negombo, Kurunegala, Anuradhapura, Kohuwala and Rathgama in the near future.
LCBL has ambitious plans to develop and expand City Finance Corporation Ltd. They have already agreed with the Central Bank of Sri Lanka to make a further investment in addition to the first capital infusion of Rs. 565 million, a further Rs. 400 million before 31 March 2019, Rs. 300 million before 31 March 2020 and an additional Rs. 200 million before 31 March 2021.
The LCBL has proposed to change the name of the company to LCB Finance Ltd. after the merger of the two companies. The new company has already located their head office at No. 76, S. De S. Jayasinghe Mawatha, Kohuwala.