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Bank shares plunge amidst domestic debt concerns 

09 Aug 2022

  • Banks suffer despite CSE closing trading in green
  • Follows President’s announcement on domestic debt restructuring
  • Eran says SL cannot go for solutions that will possibly signal a banking crisis
    By Imesh Ranasinghe  Shares of all local banks at the Colombo Stock Exchange (CSE) were down at the closure of trading on Monday (8), following President Ranil Wickremesinghe’s statement that the Government’s financial advisors are also looking into restructure domestic debt, despite the stock market seeing gains for the eighth consecutive session. Accordingly, the share price of Nations Trust Bank was down by 18.28% (Rs. 10.98), Seylan Bank by 4.46% (Rs. 0.70), Pan Asia Banking Corporation by 3.16% (Rs. 0.30), DFCC Bank by 1.63% (Rs. 0.60), Sampath Bank by 1.53% (Rs. 0.50), and National Development Bank by 1.52% (Rs. 0.50). Meanwhile, the share prices of Commercial Bank and Hatton National Bank were down by 0.95% and 0.78%, respectively. Last Friday (5), President Wickremesinghe said that the Government’s financial advisor, Lazard Ltd. is looking at both external and domestic debt, while stating restructuring domestic debt would “have far-reaching consequences”. However, Opposition and Samagi Jana Balawegaya MP Eran Wickramaratne said on Sunday (7) that Sri Lanka can not afford to give even the slightest signal of an imminent banking crisis in the country when there is no such crisis, adding that a haircut on domestic debt cannot be entertained, as Sri Lanka can’t implement solutions that will spark such a banking crisis. According to Central Bank data, the Government owes Rs. 5.9 trillion to banks by April 2022, mostly in the form of Treasury Bonds and Treasury Bills. The All-Share Price Index (ASPI) gained by 89.60 points (1.08%) to 8,422.97, and the S&P SL20 gained by 66.01 points (2.42%) to 2,794.15. A total of 85 million shares were traded within the day, with turnover surpassing Rs. 3.3 billion for the third consecutive session.  Lanka IOC PLC accounted for almost half of the turnover recorded within the day, after recording a turnover of Rs. 1.5 billion and a share price gain of 16.15% (Rs. 18.25).  


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