13 March 2017 10:42 am
Business tycoon Harry Jayawardena appears to be pushing for the appointment of ex-Commercial Bank Chairman Dinesh Weerakkody to the board of Sri Lanka’s second largest private bank, Hatton National Bank PLC (HNB), amid a legal battle to bring in a new overseas investor that has requested rights for a vacant director seat.
Accordingly, an extraordinary general meeting (EGM) called by HNB shareholders Stassen Exports, Distilleries and Milford—all three controlled by Jayawardena, will be held on March 27 at HNB Towers to decide on the appointment of Weerakkody. The appointment is subject to regulatory approvals.
HNB has been operating with one director board seat vacant since 2012, except for a brief period in 2015, with the vacant seat to be given to a strategic foreign investor that could potentially bring in value to the board.
Leading global development agency, Asian Development Bank (ADB), last September had agreed to invest US$ 50 million for 9.9 percent of the shares in HNB, under the condition that ADB would have the right to nominate one director to the board.
By October 25, 2016, 79.60 percent of the shareholders of HNB had agreed to the ADB deal through proxies.
However, on October 26, on the day of the EGM, the state-owned Sri Lanka Insurance Corporation—which had incidentally once belonged to Jayawardena—which owns 14.64 percent of the shares in HNB, had withdrawn its proxies.
Also, Jayawardena, who is the single largest shareholder of HNB through several companies, had obtained an interim order restraining the issuance of HNB shares to ADB.
HNB has filed an application to vacate the interim order, with the case currently pending in court. Last month, HNB had informed its shareholders that the vacant director seat is expected to be filled by a nominee of a strategic investor, which would be ADB, if the development bank makes its investment.
Jayawardena owns 17.90 percent of HNB but has only 10 percent of the voting rights, due to regulatory limits. The Central Bank is currently evaluating whether to increase the 10 percent maximum ownership of shares per shareholders in banks.
The state-controlled Employees’ Provident Fund owns 9.78 percent of shares in HNB, while the Captain family owns around 8.16 percent of the shares in the bank as well.