COMBank to hold special Board meeting today

• Dinesh tipped to be appointed Chairman; Dheerasinghe as Deputy; business leader Preethi new face on the Board

Commercial Bank is slated to have a special Board meeting today, the second in three days, to elect a new Chairman.
The move follows the resignation of longstanding Chairman and Board member Mahendra Amarasuriya, as exclusively reported by the Daily FT yesterday.

The biggest private sector bank and most profitable corporate (on recurrent earnings basis), yesterday formally announced the resignation of Amarasuriya, a highly-respected business leader.
The notice said Amarasuriya had advised the Board that he would be resigning from the office of Chairman and as a member of the Board with effect from 30 December for personal reasons, notwithstanding the Appeal Court Interim Order (on a case filed by shareholder K.C. Vignaraja) making it legally possible for him to continue beyond 31 December 2011.
The resignation marks the end of a highly successful and influential stewardship by Amarasuriya as Chairman for 16 years and on the Board for 25 years.
Whilst Amarasuriya  announced his move at Wednesday’s Board meeting, today’s special session by the Board has been convened to appoint a successor.
Most analysts tip the senior-most Independent Director on the Commercial Bank Board and management consultant Dinesh Weerakkody to be appointed as the new Chairman.  This has been widely anticipated by the private sector as well as certain sections of the Commercial Bank shareholding.  
This is despite alleged moves to give the chairmanship to newly-appointed Board member K.G.D.D. Dheerasinghe, who retired mid-December as Deputy Governor, completing a distinguished long service.
The latter move, allegedly with blessings from the Central Bank, had been contentious in principle, raising many concerns though some had welcomed it.
Dinesh, originally joined the Board in July 2005 as a nominee of DFCC Bank (then holding a 29% stake) and subsequently converting himself as an independent Director. He  has an impressive private sector track record including stints in multinationals, once headed the Employees Trust Fund (ETF), one of the biggest funds in the country.
The likely appointment of Dinesh as Chairman suggests a compromise has been struck, whilst others said it was a natural outcome. It is learnt Dheerasinghe will be appointed Deputy Chairman of Commercial Bank.
Credence for Dheerasinghe being likely Chairman of Commercial Bank stems from the fact that a former Deputy Governor Dr. Ranee Jayamaha was appointed to chair HNB, the second largest private sector bank and like Commercial, with considerable shareholding by State funds.
However, unlike Jayamaha’s appointment, which was after several months since her retirement, Dheerasinghe’s timing was questioned since he relinquished official duties only two weeks ago. Corporate circles refer to the cooling period as usually being three months.
UNP MP Dr. Harsha de Silva, who has been a consistent and vocal critic of EPF investments in banks, viewed the appointment of Dheerasinghe as being in conflict of interest and a reflection of the growing state of bad governance.
He likened retiring Central Bankers being dished out Board positions or chairmanships in financial institutions to an extension of loyalty to and influence of the incumbent head of the regulatory body. De Silva said that this was similar to retiring heads of armed forces and politicians getting plum diplomatic postings.
Timings and motives apart, traditionally career Central Bankers have been widely respected and their entry to private sector boards have been viewed as beneficial and value adding to companies in most cases.
As reported yesterday in the Daily FT, Commercial Bank also announced the resignations of Deputy Chairman (as well as CIC Holdings Chairman) B.R.L. Fernando (16 years on the Board) and Dr. H.S. Wanasinghe (21 years on the Board and over 80 years) from 31 December.
One of the vacant positions has been filled with the appointment of professional and industry leader Preethi Jayawardena with effect from 28 December.
Jayawardena, a Fellow of the Institute of Chartered Accountants of Sri Lanka, is also the Chairman of The Finance Co Plc in addition to being Managing Director and CEO of Chemanex Plc., as well as a being Director on the Board of CIC Holdings, among several others. He is also the Chairman of the Ceylon National Chamber of Industries.
He is the second seemingly State funds-influenced appointee to the Board of Commercial Bank.
The last appointment of Lakshman Hulugalle, the Director General of the Media Centre for National Security (MCNS) and Deputy Chairman of the National Livestock Development Board in March, was cited as a breakdown of good governance.
Senior ex-banker Ranjith Fernando quit from the Board at the same time, prior to considering his re-election at the AGM, allegedly owing to outside influence.
Other members of the Commercial Bank Board are Amitha Gooneratne (Managing Director), who will complete 15 years in that position next month, Chief Operating Officer Ravi Dias and Prof. Uditha Liyanage.
Commercial Bank in the first nine months of 2011 recorded pre-tax profit growth of 33.72% to Rs. 8.7 billion and a post-tax profit of Rs. 6.09 billion, up by 63.56% over the corresponding period of last year. The net interest income of the bank reached Rs. 13.419 b, recording a growth of Rs. 1.685 b or 14.36 % compared to the corresponding period last year.