Today we reveal that a state bank has restructured an overall facility of Rs 2,500,000,000 (Rs 2.5 Billion).
Sources who came forward and who wished to maintain anonymity revealed that the facility was restructured for a short period of time in the expectation that the various problems being faced by the company would be ironed out.
The company in question has as one of its beneficial owners a high profile individual now in remand over a complaint made by a government institution.
Although the company’s several bank accounts were court-ordered frozen, the relationships enjoyed by them ensured that the bank had to restructure it. The danger to the bank was that without the company trading to its full capacity and with an officer in remand, the bank may have had to face transferring the colossal sum of Rs 2.5 billion to its non-performing loans portfolio. At that level of debt it would have almost certainly attracted serious concerns from an irate public, inquisitive media and perhaps even the Central Banks’ monitoring unit.
As detail emerge, we have become aware that the collateral is apparently completely and wholly outside of usual prudent bank practice.
A related business near Beruwela whose forced sale value was calculated at Rs 220 million has apparently been used for collateral – which led analysts to speculate that the banks’ risk assessment committee must have been in deep slumber or were under orders to let the application sail through. Both scenarios would spell disaster for the bank at some point.
Sri Lankan born British MEP Nirj Deva’s one-time family business is also in the same area but it is not believed to be the same one that was pledged to the bank.
