The Central Bank has begun taking various steps to assist/rehabilitate Ceylinco Group companies in trouble after the Golden Key Credit Card Company crashed.

"We have done a number of things already" Central Bank Governor Ajit Nivard Cabraal said on the phone from Manila yesterday. "We are hopeful that the desired impact will be visible soon."

Among the measures already in place are talks between Seylan Merchant Bank PLC (SMB)and the People’s Leasing Company about the divesting of Seylan Merchant Leasing PLC.

In a Stock Exchange filing on Friday, SMB said that it was in talks "pursuing the possibility of divesting the controlling stake of Seylan Merchant Leasing PLC to People’s Leasing Company Limited."

A Non-Disclosure Agreement had been signed on Friday between the two parties (Seylan Merchant Leasing and People’s Leasing) and SMB said that further information in this regard will be disseminated to the Colombo Stock Exchange once the due diligence is completed and regulatory approvals are obtained.

Meanwhile the Central Bank (CB) said that negotiations are presently underway for the engagement of "suitable managing agents" for Ceylinco Investment and Realty Limited and Asian Finance Limited, both members of the Ceylinco group. The CB was closely managing the progress of such negotiations.

The Finance Company PLC, also a member of the Ceylinco group, is also having problems and the CB has identified what it called "certain key executives" of the company to be entrusted with overall management responsibilities of The Finance. These appointments are due to be made early this week.

Assessment on the current state of the company are being made and the four-member expert committee appointed by the Central Bank last week will guide and advice the selected management team at The Finance.

The expert group comprises Messrs. Nishan Fernando, Chartered Accountant, President of the Institute of Chartered Accountants of Sri Lanka, Arittha Wickramanayake, Attorney-at-Law who was a former Director General of the Securities & Exchange Commission, H.M. Hennayake Bandara, a Chartered Accountant who is President of the Association of Accounting Technicians of Sri Lanka and Additional General Manager of the NSB and Ajith Devasurendra, Deputy Chairman of the Browns Group of Companies who was a former President of the Primary Dealers Association.

Further, the Merchant Bank of Sri Lanka PLC (MBSL) announced on Friday that it has accepted an assignment from The Finance & Guarantee Co. Ltd., a member of the Ceylinco group to provide consultancy services to F&G Group companies "to restore public confidence and resolve its current liquidity problems."

This arrangement has been made with Central Bank clearance and the Central Bank said that MBSL has been permitted to enter into a Management Agreement with F&G "so that the activities of F&G would be managed and monitored by MBSL."

MBSL also announced that it was in preliminary discussions with the Central Bank to undertake the management of the affairs of Ceylinco Savings Bank "and to rehabilitate the bank with a view of establishing a long-term relationship."

Meanwhile the Central Bank announced that the stimulus package for the banking, financing and leasing industries is currently under implementation and those companies seeking assistance under this plan will be able to access this window shortly.

Registered Finance Companies will also be permitted to reduce their liquidity requirements on fixed deposits from 15% to 10% of outstanding and savings deposits from 20% to 15%.

Conditions including transfer of funds to related companies and the curtailing of remuneration and other incentive payments to directors and key personnel will be imposed on those obtaining facilities or concessions under the stimulus package. New reporting formats and frequency is also being required from such companies.