Sri Lanka’s Hatton National Bank Plc (HNB) says the fresh infusion of capital guided by extensive technical expertise of the Asian Development Bank (ADB), would further strengthen its systems and processes.
As recently outlined by the MD/CEO of HNB Jonathan Alles, HNB is on its way on an extensive digital transformation journey. The technical assistance that would be available through this strategic investment will power a complete transformational process within the organization in order to further augment HNB’s position in the digital space.
HNB will also be in a position to harness technical expertise to further refine its stringent risk management framework and drive continuous process improvement.
The proposed infusion of capital by the ADB would support HNB, as it moves towards implementation of more stringent capital adequacy requirements stipulated under the BASEL III regulatory framework.
The statement was made on Friday amidst the Commercial High Court issuing an Interim Order on HNB and its key shareholders on Thursday preventing them from holding a scheduled Extraordinary General Meeting (EGM), until a court decision is made on the bank proceeding with a share issuance of $ 50 million to the Asian Development Bank (ADB).
“Already a premier banker serving the total needs of the nation, HNB’s breakthrough partnership with the ADB is anticipated to open up new business opportunities across multiple areas including SME, Microfinance, project finance and renewable energy,” the Bank said in a statement on Friday.
It noted that the ADB will also provide HNB with access to a wealth of knowledge on world class governance standards, corporate social responsibility and sustainable banking practices which HNB aims to integrate into its own business model, risk management framework and governance practices going forward.
“The ADB’s investment in HNB will serve to provide a sizable capital buffer and position HNB as one of the best capitalized commercial banks in Sri Lanka,” the statement noted.
Furthermore, the statement added that this strategic partnership will also widen the horizons for inorganic growth for HNB beyond the shores of Sri Lanka and the new investment to be made by the ADB would ultimately deliver enhanced value to all the stakeholder of HNB.
In September, HNB PLC announced that its Board of Directors has granted the ADB approval to purchase a substantial equity stake in the Bank by way of a fresh issue of shares. The Bank had originally scheduled the EGM for October 26, 2016.
“This landmark partnership with the ADB is also anticipated to significantly raise the profile of HNB on the global stage, potentially opening up new avenues for the bank to raise funding from international sources at attractive rates and long tenors; an area in which HNB has already demonstrated prolific success, most recently in relation to the raising of USD 185 Mn from multilateral financial institutions including USD 100 Mn from the ADB,” the Bank noted.
Upon securing regulatory approval and shareholder consent at an Extraordinary General Meeting (EGM), the Bank is planning to issue new ordinary voting shares worth USD 50 Mn, thereby enabling ADB take up to 9.9% equity stake in the Bank with the valuation of each share being based on the 30-day average trading price immediately preceding the EGM but restricted to a price band between Rs. 190 – Rs. 220.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, ADB assistance totaled USD 27.2 Bn, including co-financing of USD10.7 Bn.