Five prospective bidders interested in management control and a third of the Seylan Bank’s equity has been short-listed by the Central Bank and will be issued bid documents and an information memorandum on the bank tomorrow to enable them to perform their due diligence and submit their offers, the Central Bank said on Friday night.

The five institutions short-listed are JKH, Lanka Orix Leasing Company PLC (LOLC), National Development Bank PLC (NDB), Sampath Bank PLC and V.V. Karunaratne & Company which is in the building trade.

There was no word from the Central Bank on who the sixth prospective investor who had submitted an expression of interest but has not been included in the shortlist.

Of the five in the list, JKH together with Central Finance has control of the fast-growing Nations Trust Bank PLC while the NDB and Sampath Bank are also well established in the commercial banking industry.

Although LOLC is not into banking, analysts regard this company, the pioneer and a leader in the country’s leasing industry, to have had the resources and the financial muscle to seek a banking license.

"However, it is much easier to get into the industry by buying into an already established commercial bank with a 93-strong branch network countrywide, trained staff and other substantial banking assets," an analyst said.

He also noted that Mrs. Rohini Nanayakkara, currently the Chairperson of LOLC is a very experienced banker who retired as General Manager/CEO of the Bank of Ceylon and then joined the Seylan Bank where she was Managing Director/CEO for some years prior to her retirement.

Well informed business sources said yesterday that the two banks and the banking-connected institution (JKH) are very interested in Seylan Bank provided an investment of a minimum US$ 50 million "would make sense" on the basis of the information memorandum that would be in their hands tomorrow and the due diligence that would follow.

However, there was a possibility that a request will be made to extend the final date of May 7 fixed for the submission of bids as this period of less that two weeks is considered inadequate for a proper due diligence.

A data room is being set up to provide additional information and clarifications that may be sought over and above what is set out in the information memorandum.

Ernst & Young, a well known firm of accountants, did the preparatory work including the preparation of the extensive information memorandum.

Some of the bidders are looking at partners, including overseas interests, to participate as equity investors. At least two of the prospective investors said yesterday that their final decision on whether to press ahead with a bid depended on whether the investment "will make sense."

In addition to the equity infusion there must be subscription to the bank’s debt.

"We will have to look at the figures and the full picture and make a quick decision on whether we want to go ahead on the basis of what we see," one prospective bidder explained.

Insiders in the banking industry regard Seylan as a good prospect given its strong brand and intrinsic strengths provided its exposure to the Ceylinco group is severed as will be the case under the new order. Some Central Bank seniors believe that the bids may overshoot the USD 50 million set.

Analysts said that under the previous dispensation, Seylan was unable to raise equity capital by way of rights issues like the other banks because of the inability of the Ceylinco-connected shareholders to put up the cash.