Yes. Again. And this time it seems, on a far bigger scale.
The Merchant Bank of Sri Lanka an ‘investment bank’ and a listed subsidiary of state-run Bank of Ceylon has taken over and is planning to ‘restructure’ Ceyliinco Group’s Finance and Guarantee group of companies. According to this LBO report.
Meanwhile, all refunds from these companies have been stopped. Mainly to prevent ‘influential’ depositors getting their funds at the expense of others and a recovery plan will be revealed in ‘two weeks’ according to a media report released by MBSL.
Apparently there is a ‘sufficent asset base’ present and investors in F&G real Estate Co. will have to only sacrifice ‘certain time period’ to get their refunds. This from the MBSL chairman Janaka Ratnayake.
Now it doesnt exactly specify if full refunds will be available, but if you were an investor in that group, and if i was you, i’d start wondering a bit because the same report specifically states that the F&G groups assets were 13.5 billion while their liabilities were 12879 billion.
Yeah, have another look at those numbers. Now im not a big financial guy but even i know that a thousand to one difference between liabilities and assets will spell trouble. Even assuming most of these liabilities were not long term.
Mr. Ratnayake also said that F&G Real Estate Company Ltd had been offering interest rates of 42% per year for some customers and has been rolling over deposits. Now does that ‘investment strategy’ remind you of anything else? like for e.g. Bernard Maddof? The chap who pulled off a $50 Billion Ponzi scheme under the eyes of the likes of Alan Greenspan?
And if we thought Sakvithi was bad, he’ll be chickenfeed in comparison to the potential destruction if the MBSL restructuring plan somehow fails and all this money is lost.