The Central Bank’s Monetary Board (CB) suspended the primary dealership of Pan Asia Banking Corporation (PABC) for six months yesterday.
The Monetary Board which met on Monday decided to take regulatory action on PABC, a Primary Dealer, based on the findings of an investigation carried out by the CB, a press release issued by the Department of Supervision of Non-Bank Financial Institutions and Public Debt Department said.
“This regulatory action restricts PABC’s access to the primary auctions for government securities. It does not affect any of the other activities or services of PABC,” the CB statement said.
Following this announcement, the trading of the PABC in the Colombo Stock Exchange was halted pending announcement from the company. This was stated in the CSE website.
It was revealed at the Presidential Commission inquiring into the Bond issues last month that the PABC played an intermediary role to EPF and the Perpetual Treasuries Limited in Bond transactions, and that the PABC had bid on behalf of the PTL at the questionable auction held on February 27, 2015.
The PABC had been used as an intermediary because both the EPF and PTL could not trade with each other due to trading restrictions on counter-parties.
PABC Deputy General Manager Richard Dias testifying before the Commission last month revealed that the bank mediated between the EPF and the PTL under the instructions of former PABC Chairman Nimal Perera. Perera had left PABC in March this year. Following the revelations, the CB last month interdicted Saman Kumara, a senior officer of the Central Bank’s EPF Department, who dealt on behalf of the EPF in secondary market transactions with PTL.
The CB in its statement yesterday further stated the regulatory action taken on the PABC “does not in any way affect the company’s ability to carry on banking activities set out in Schedule II of the Banking Act, No. 30 of 1988 as a Licensed Commercial Bank”.
“Accordingly, PABC may continue to deal in government securities to the extent permitted under schedule II of the Banking Act. Action will also be taken by the Central Bank to safeguard the interests of the customers and counterparties of PABC in the government securities market, in an orderly manner,” it added. The Pan Asia Banking Corporation in a statement yesterday confirmed that PABC has been advised by the Central Bank that its primary dealer licence has been suspended for six months.
“The Bank wishes to clarify to the general public that this action restricts only the bank’s access to the primary auctions for government securities”, the statement said.
The PABC said the bank’s regular banking activities or its ability to deal in government securities in the secondary market are not impacted or limited in any manner due to the Central Bank’s decision.