BDO, ICCSL forum highlights impact of non-performing bank loans on economy

BDO Partners Sri Lanka and the International Chamber of Commerce Sri Lanka (ICCSL) jointly organised a breakfast forum at the Kingsbury yesterday.

The main speaker at this event was former Global President of the Association of Chartered Certified Accountants (ACCA) and BDO Ireland Partner Brian McEnery, who is a specialist in corporate recovery and insolvency. 

BDO Sri Lanka Managing Partner Sujeewa Rajapakse, welcoming the audience, said that it was a privilege to have someone of McEnery’s calibre visiting Sri Lanka to share his experience with our banking community.   Rajapakse emphasised that the banking sector contributes significantly towards the country’s growth momentum. He further added that lending to the SME sector is important and the lending rates should be at a lower rate to boost this segment of the economy.   

The presentation for the day was on the topic ‘Good Banking, Bad Banks, and Non-Performing Loans – Ireland’s Experience’. McEnery shared his experience in working as a member of the Board of Directors of Ireland’s specialist non-performing loan bank National Asset Management Agency (NAMA), which is the biggest NPL Bank in the world with a balance sheet of EUR 74 billion in non-performing loans. NAMA has been described as the best-performing non-performing loan bank in the world. McEnery explained how the concept of setting up a non-performing loan bank requires the involvement and commitment of the government, the regulator and the banking sector in order for it to be effective and profitable. He also explained the challenges faced by the banking community in Ireland and how the NPL Bank supports the banking system in mitigating its risks and minimising its costs. Further, it brings stability to the banking industry and contributes positively to other macro-economic factors. It is seen as a win-win for all stakeholders concerned. 

HNB CEO/MD Jonathan Alles moderated the Q&A session with very pertinent questions coming from the audience. A significant issue highlighted by many bankers was that the recovery procedure instituted through the courts in Sri Lanka takes a considerable amount of time, which makes it rather ineffective. Brian was of the view that Sri Lanka should consider facilitating an alternate dispute resolution mechanism to deal with recovery of bank loans. It was also highlighted that key management personnel of banks should take preventive measures to ensure that the NPL is pruned and risks mitigated. The ownership rules in banks and the need to rotate directors were also discussed. 

The event closed with ICC Chairman Dinesh Weerakkody handing a token of appreciation to McEnery. 

Pix by Lasantha Kumara