IFC and DEG invest in Cargills’ greenfield bank
Cargills Agriculture and Commercial Bank Limited (Cargills Bank), which received its provisional banking license from the Central Bank of Sri Lanka in 2011, said it has signed agreements with the International Finance Corporation (IFC), a member of the World Bank Group as well as with DEG - Deutsche Investitions- und Entwicklungsgesellschaftmbh, a subsidiary of KfW.
The two organizations will be investing into the Cargills Bank, taking a 10 percent stake each. Last Friday, Mirror Business exclusively reported that IFC was planning over US $ 10 million investment in Cargills Bank by way of equity and debt funding.
IFC and DEG’s investments are expected to bring a wealth of international experience including operational efficiency and global best practices to the Bank which would lead to strong financial performance and a robust corporate governance system.
This is also the first time in Sri Lanka that IFC and DEG are simultaneously investing in a local entity. Cargills Bank is also among a select group of banks that have succeeded in attracting investments from these global financial institutions.
Ranjit Page, Deputy Chairman of Cargills (Ceylon) PLC, noted that the joint investment of IFC and DEG into the Bank translates into the immediate accessibility to global expertise and experience in the financial services domain.
“This is no doubt a solid start to the venture and we look forward to working closely with IFC and DEG to bring global best practices to the local banking arena. The Cargills Group has a strong foothold in the Agriculture sector which would serve us well as we strive to build a unique technology-driven Banking model with a special focus towards theses under-serviced sectors.
This approach is one that works well with the agenda of IFC and DEG, which are two international institutions dedicated to the cause of development through effective engagement with the private sector.”
He added that the Bank team would work with the two partners to bring cutting-edge products and services to the market on par with international commercial Banks.
Adam Sack, IFC Country Manager for Sri Lanka and Maldives said, “Cargills Bank’s unique ability to tap in to the extensive network of Cargills Food City suppliers and customers will make it easier for small business owners and farmers to access finance. Through IFC’s investment we expect to create over 90,000 direct and indirect jobs by 2019, primarily in the agriculture sector.”
Speaking on behalf of DEG Hubertus Pleister, Head of DEG’s Asia Department said, “With its innovative business model Cargills Bank will provide financial services also to small businesses in rural areas – an essential precondition for successful growth of the rural economy in Sri Lanka. This business idea fits very well to our goal to promote more inclusive banking and in alliance with such strong and trusted partners as Cargills Group and IFC we look confidently to the future development of the bank.”
“Cargills Bank is proud to have entered into a strategic partnership with IFC and DEG when the Bank is on the verge of commencing of commercial operations. This means that right from the inception we will be exposed to the best international corporate governance practices and strategies which will undoubtedly assist in establishing a strong and stable Bank,” Harris Premaratne, Managing Director/CEO of Cargills Bank stated.
Pemaratne added that the joint investment into a greenfield bank by two international financial giants augurs well its future.
“This is a strong vote of confidence in the Bank, its management and sponsors. DEG and IFC also has vast experience in agri and micro lending which is bound to stand the Bank in good stead. Furthermore, as the Bank evolves it will have the benefit of accessing long-term funding from both DEG and IFC to develop Sri Lanka’s agriculture, dairy, fisheries and SME sectors,” he noted.