Bank of Ceylon bolstering country’s economy through corporate, offshore banking strategies

- In conversation with M. R. N. Rohana Kumara, Deputy General Manager of Corporate and Offshore Banking at Bank of Ceylon

Banking institutions are the linchpins of economic stability and growth. As the largest bank in Sri Lanka by both assets and market reach, Bank of Ceylon (BOC) occupies a central position in shaping the nation’s economic landscape.

In a country that has experienced its share of economic upheavals, BOC’s corporate and offshore banking divisions are crucial in steering the economic ship towards stability and growth. By offering tailored financial solutions to corporations and handling offshore investments, BOC not only supports local businesses but also plays a significant role in attracting foreign investment and managing the country's foreign exchange reserves.

To understand the depth of BOC's impact, we spoke with M. R. N. Rohana Kumara, Deputy General Manager of Corporate and Offshore Banking at Bank of Ceylon. His insights reveal how the bank’s strategic initiatives in corporate and offshore banking are instrumental in driving economic growth, supporting businesses through challenging times, and positioning Sri Lanka as a burgeoning hub for international finance.

Following are the excerpts of the interview.

How do the Bank of Ceylon's corporate and offshore banking initiatives contribute to the overall economic growth and stability of Sri Lanka?

In any country, the banking sector plays a pivotal role in economic stability and growth. The financial sector generally comprises three major components: banks, non-financial institutions like finance and leasing companies, and the informal sector. Each of these sectors plays a crucial role in driving the economy, but banks are particularly vital due to their direct involvement in financing and investment.

In Sri Lanka, Bank of Ceylon is the largest bank by assets and market reach. To give you an idea of our impact, the total loans and advances granted by the banking sector amount to nearly Rs. 11 trillion. Out of this, Bank of Ceylon has extended facilities amounting to Rs. 2.3 trillion, which translates to a significant 21.3% market share. Among the top five banks in the country, our share is even more pronounced at approximately 32%.

48% of BOC loan book represents facilities/advances? granted to corporate clients under Corporate and Offshore Banking Division . These corporate clients are major contributors to the economy as they provide employment, stimulate economic activities, and generate foreign exchange through exports. Corporations are essential as they help in increasing the country’s foreign currency reserves, especially when engaged in export businesses.

Moreover, our bank plays a crucial role in managing government debt requirements and dealing with State-Owned Enterprises (SOEs). We also have a dedicated trade services arm that handles all trade-related activities. This is vital for the country as we need foreign currencies to balance trade deficits. Through our corporate division, we manage export activities, which are a significant source of foreign currency for Sri Lanka.?

What strategies does Bank of Ceylon implement to manage and grow its corporate banking segment?

Bank of Ceylon employs a multifaceted strategy to manage and expand its corporate banking segment. First, we have a comprehensive trade finance unit that facilitates international trade transactions and helps businesses navigate the complexities of global trade. This unit supports our clients in securing funding for import and export activities, which is crucial for maintaining the flow of goods and services.

Additionally, we have established a specialized Project Finance Division under our corporate banking umbrella. This division is focused on large-scale investment projects, with a particular emphasis on renewable energy projects, which are increasingly in demand. By managing these large projects, we contribute to significant economic development and infrastructure improvements.

We also recognise the importance of collaboration in handling substantial projects. To manage the risks associated with large investments, we engage in syndicate loans, partnering with other banks to share the financial burden and risk. This collaborative approach allows us to undertake more significant projects while mitigating individual risk.

Furthermore, to support our export-oriented clients, we have established an Export Circle. This initiative helps in growing the export market by providing tailored financial solutions and support to businesses engaged in international trade.?

Looking ahead, we are planning to set up a branch in the Port City Economic Zone. This strategic move is aimed at enhancing our service offerings and supporting the growing economic activities in this emerging business hub. We are currently working on the feasibility report and regulatory amendments necessary for this development.

How is the Bank of Ceylon adapting its corporate banking services to support businesses during recent economic challenges in Sri Lanka?

Sri Lanka has faced significant economic challenges in recent years, impacting both retail and corporate customers. Recognising the critical role of our corporate clients in the economy, Bank of Ceylon has taken several measures to support them during these difficult times.

We have extended various concessions to our long-standing corporate clients, including tailored repayment solutions such as moratoriums and grace periods for loan repayments. These measures are designed to ease the financial burden on businesses and help them navigate through periods of economic stress.?

When necessary, we have restructured facilities to match our clients’ repayment capacities. This flexibility has been crucial in helping businesses maintain operations and stabilize their financial positions.?

Additionally, we have established a Business Revival Unit specifically to assist stressed businesses. This unit focuses on rehabilitation efforts, not just for non-performing accounts but for any businesses experiencing stress. We work closely with these companies to develop customized restructuring proposals that can help them return to normal operations.

Thanks to these initiatives, many of our clients have managed to get back on track, improving their cash flows and repayment capacities. We continue to monitor the situation and provide support as needed to ensure that businesses can recover and thrive.

How does the Bank of Ceylon ensure it remains competitive in the corporate banking sector?

To stay competitive in the corporate banking sector, Bank of Ceylon leverages several key advantages and strategies. Firstly, as the largest bank in the country, we have the highest single borrower limit (SBL) and large exposure limits, as set by the Central Bank. This allows us to support significant corporate and infrastructure projects that smaller banks might not be able to handle.?

Our extensive island-wide branch network and customer base of over 14 million provide us with a solid foundation to maintain competitive rates and services. This extensive network enables us to offer competitive interest rates and fees, ensuring that our clients receive value for their financial dealings with us.

Our long-standing presence of nearly 85 years gives us a wealth of experience and expertise. Our talented staff is adept at handling complex corporate lending requirements and structuring deals effectively. This experience and our strong financial position enable us to cater to our clients' needs efficiently and stay ahead of the competition.?

Moreover, we continually assess market trends and adapt our services to meet evolving client needs. By investing in technology and innovation, we ensure that our services are up-to-date and aligned with the best practices in the industry.

What are the biggest challenges facing the sector, and how is the Bank of Ceylon addressing these challenges?

The banking sector faces several challenges, particularly in the current economic climate. One significant challenge is the high interest rates, which reached around 28-30% in recent years. Such high rates pose a risk not only to our corporate clients but to the entire banking industry. The double impact of the COVID-19 pandemic and the economic downturn has created a challenging environment for businesses.?

To address these challenges, the Bank of Ceylon has implemented several measures. We continue to offer tailored restructuring arrangements for clients facing financial difficulties, helping them navigate through high-interest periods and economic stress. Our Business Revival Unit plays a crucial role in this regard, providing customized solutions to businesses in need.?

Another challenge is the negative credit growth compared to previous years. While some sectors, such as tourism, are recovering, others like construction and automobiles are still under stress. We are actively working to support these sectors through targeted financial solutions and restructuring efforts.?

Additionally, the outflow of experienced and talented professionals is a concern, affecting various industries, including banking. Despite this, we maintain a skilled and experienced team that enables us to continue providing high-quality services and support to our clients.

Overall, we are confident in our ability to overcome these challenges through strategic planning, adaptability, and leveraging our financial strength and expertise.

Is there anything else you would like to add or any message to the society overall?

One of our main focus areas under corporate banking is to develop the export sector. This is crucial for increasing the country’s foreign currency reserves and promoting economic growth. We conduct various training and awareness programs through our trade finance division to support and develop exporters.

As a bank, we are committed to supporting economic development and helping our clients succeed.

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