By Jithendra Antonio
State-owned funds once again showed muscle, pushing the appointment of a top government official to the director board of Sri Lanka’s largest private bank, Commercial Bank of (Ceylon) Plc.
According to an announcement by the Commercial Bank, Lakshman Hulugalle, Director General, Media Centre for National Security has been appointed to the director board of the bank effective yesterday, to fill a casual vacancy on the board.
The announcement further said United Motors Chairman Ranjith Fernando decided to withdraw from the position of director, prior to considering his reelection by the shareholders at yesterday’s Annual General Meeting.
Meanwhile, Hulugalle’s appointment came to the limelight, a week after the appointment of President’s Banking Advisor, Dr. Ranee Jayamaha as Chairperson of Hatton National Bank PLC, with EPF and state institutions increasing their shareholdings in the bank (over 25%) in the last quarter of 2010.
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The announcement also said another board director, Dinesh Weerakoddy ceased to be a director with the adoption of a new Articles of Association at the Extraordinary General Meeting held yesterday, and was thereafter appointed to the board to fill another casual vacancy.
According to the resume submitted by the Commercial Bank to the Colombo Stock Exchange as per the regulatory requirements, Hulugalle doesn’t possess any banking or financial background.
At present, nearly 20 percent of Commercial Bank’s shares are in the hands of government institutions, including Employee Provident Fund and Sri Lanka Insurance Corporation. As at December 31, EPF holds 4.7 percent of Commercial Bank while SLIC though its Life and General Funds holds 9.5 percent.
A day before the AGM, (Tuesday), EPF further increased its shareholding in Commercial Bank to over 9%, purchasing 4.4 million shares in three crossings at Rs.270, followed by Monday’s purchase of 430,000 shares at the same price.
Meanwhile, most analysts and economic experts question how ethical it would be for the government, through EPF and SLIC to take control of the entire commercial banking sector.

EPF is the sixth largest shareholder in Seylan Bank PLC having 5.16%,  seventh largest shareholder of DFCC Bank having 4.76%, second largest shareholder of Sampath Bank having 8.25% and second largest shareholder of HNB  having over  7% as at December 31, 2010.