Sri Lankan Prime Minister Ranil Wickremesinghe has ordered a reversal and a probe into the 1.3 billion rupees ($8.7 million) Seylan Bank foreign deal as it failed to follow proper procedure, the country’s finance minister said on Monday.
On Friday, 13 million shares or 7 percent stake in Seylan Bank owned by state-run Bank of Ceylon were sold to a foreign fund at 100 rupees each, a 17.6 percent premium to the stock’s closing price that day, through JB Securities.
“It has not taken approval from the Bank of Ceylon board of directors. So the order is not only to cancel the transaction, but also to take action against those who (are) involved in it,” Finance Minister Ravi Karunanayake told Reuters.
The order comes at a time when President Maithripala Sirisena’s coalition is facing criticism from opposition led by former President Mahinda Rajapaksa that his successor’s administration has been privatising or selling state assets to foreigners while it was not taking strong action against corruption.
Officials from the Colombo Stock Exchange were not immediately available for comment.
Murtaza Jafferjee, CEO at JB Securities, the stockbroker of the deal, said they were waiting for more clarification on the reversal.
Shares in Seylan Bank were up 5.5 percent at 89.70 rupees at 0818 GMT, while the broader stock index was down 0.23 percent.
Stockbrokers said the market was confused after the prime minister’s order.
“Till a clear picture comes, market will be concerned and confused. The deal was positive at a time when there was no market-moving news,” said Hussain Gani, deputy CEO at Softlogic Stockbrokers.
The bourse has reversed one transaction before this in the last five years due to a suspected corrupt deal by a state-owned bank. ($1 = 149.3000 Sri Lankan rupees)