NDB, DFCC begin consolidation talks, shareholders to be kept informed of progress

The Board of Directors of NDB and DFCC officially confirmed the commencement of preliminary discussions with a view to consolidate the two entities in pursuance of government policies announced in Budget 2014.

Issuing a joint announcement to the Colombo Stock Exchange (CSE), NDB and DFCC emphasized that a final decision would not be reached without prior stakeholder approval.

“Final decisions would be dependent, among others, on arrangements being agreed keeping paramount the interests of customers, employees (which in the case of DFCC include those of DFCC Vardhana Bank PLC) and other stakeholders of the banks.

“Moreover consolidation of the two entities will be dependent on regulatory approvals and possibly the passage of facilitative legislation,” the statement noted.

Whilst no direct references to tax concessions were made in the statement, such incentives are also expected to arise in order to facilitate the consolidation process further. Further, the director boards of both banks assured their shareholders, employees, regulatory authorities and investing public that they will keep them informed of the progress in connection with the proposed transaction as and when necessary. The Central Bank Governor Ajith Nivard Cabraal recently told media that the consolidation process encouraged by the government should not result in retrenchment of staff. “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 was quoted as saying.