Finance firms merging should not retrench staff: CB Governor
LBO - Sri Lanka’s finance companies which are being encouraged to merge with one another should not retrench staff, Central Bank Governor Nivard Cabraal said.
The monetary board, the decisionmaking body of the Central Bank has decided on the move at a meeting Thursday.
“In the event of a consolidation or merger there should be no retrenchment of staff and all staff members have to be part of the consolidated entity,” Cabraal said.
He said the sector was expected to grow faster after consolidation and experienced staff were needed by the industry. “Nevertheless there could be a reallocation of duties,” he said.
Sri Lanka’s Central Bank, which is the regulator for non-bank financial institutions, wants to trim over 50 institutions into 20 smaller ones amid rising bad loans in some companies. Several of the smaller ones are however well-managed, analysts say.
Economic conditions have also tightened since 2012 following balance of payments troubles due to a credit bubble worsened by loans taken by state enterprises to finance energy subsidies.