Tuesday, June 18, 2024

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Former PM says Banks could be the next casualty

Former Prime Minister Ranil Wickremesinghe said last week that some banks in the country are in danger of collapsing. The leader of the UNP made these comments while addressing a gathering of Bankers.

“The economy cannot survive without banks. We need a safety net to protect the banks. The combination of the dollar crisis and the collapse of the banks is not something to be taken lightly. Some of our banks are in the brink of collapsing and some of them will have to be rebuilt,” he noted.  

According to analysts Four Banks including the two state banks have invested over 5Billion USD in Sri Lanka Sovereign Bonds. Now with an impending default, the government has to find a way of protecting them.

The Former PM further said “I will not be hesitant to say that the private sector should be held responsible for the current crisis. After this government came to power, they went and told the President if all income taxes were reduced, the country’s economy would develop. Has it developed now?” He questioned.

The other issue is it’s a race against a deadline to “solicit concurrence” from the interest coupon holders not paid on 18/4 prior to 18/5. If this is not obtained its hard default which will make the life of banks even more difficult.

Analysts say with the politicization of bank boards both in the private sector and public sector by Dr PB Jayasundara and SR Attygalle in the last two years, the confidence within the banks are also an issue.

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