MICROCAPITAL BRIEF: Hatton National Bank of Sri Lanka to Acquire Majority Stake in Prime Grameen Micro Finance

Hatton National Bank (HNB), a private commercial bank in Sri Lanka, reportedly has entered a shareholder agreement through which it will acquire a controlling 51-percent stake in Prime Grameen Micro Finance, a Sri Lankan microfinance institution (MFI). Jonathan Alles, the Managing Director and CEO of HNB, was quoted stating, “Micro finance will play a key role in the development of rural Sri Lanka and in distributing the dividend of economic growth more evenly among society; as a premier local bank we take pride in participating in this development process.” He, along with Dilshan Rodrigo, Chief Operating Officer of HNB, signed the agreement on behalf of HNB. B. Premalal the Chairman of Prime Lands Limited. and Sandamini Perera, the Deputy Chairman of Prime Lands Limited Ltd signed on behalf of Prime Grameen Micro Finance.

As of December 2013, HNB reported total assets of LKR 510 billion (USD 3.9 billion), total deposits of LKR 385 billion (USD 2.9 billion), gross loans and receivables of LKR 363 billion (USD 2.8 billion) and return on assets (ROA) of 1.5 percent. Prime Grameen, which is licensed to accept deposits, reported total assets of LKR 2.8 billion (USD 25 million), total liabilities of LKR 2.5 billion (USD 22 million), return on assets (ROA) of 18.75 percent and return on equity (ROE) of 41.87 percent as of July 2011. More recent financials are not available.

By Ananya Tiwari, Research Associate

About Hatton National Bank (HNB)

Hatton National Bank (HNB) is a private commercial bank in Sri Lanka that was founded in 1888 to serve Ceylon’s tea industry. It has since become a public limited company that, in addition to traditional financial services, offers financial literacy and microfinance products through its “Gami Pubudwa” (Village Awakening) program. HNB branch network covers 250   locations across Sri Lanka. In 2000 HNB opened a representative office in Karachi, Pakistan, and another in Chennai, India. As of December 2013, HNB reported total assets of LKR 510 billion (USD 3.9 billion), total deposits of LKR 385 billion (USD 2.9 billion), gross loans and receivables of LKR 363 billion (USD 2.8 billion) and return on assets (ROA) of 1.5 percent.

About Prime Grameen Micro Finance

Prime Grameen is a Sri Lankan microfinance institution established in 2000 with the aim of providing microfinance services to small-scale entrepreneurs. It has been licensed to obtain public deposits by the Central Bank of Sri Lanka. As of 2011, Prime Grameen reported total assets of LKR 2.8 billion (USD 25 million), total liabilities of LKR 2.5 billion (USD 22 million), return on assets (ROA) of 18.75 percent and return on equity (ROE) of 41.87 percent as of July, 2011. More recent financials of Prime Grameen are not available as of 2014.

Sources and Additional Resources

[1] The Sunday Leader, http://www.thesundayleader.lk/ 2014/10/05/acquisition-of- prime-grameen-micro-finance- limited-by-hnb/

MicroCapital Story, August 15, 2014, “Hatton National Bank (HNB) of Sri Lanka to Acquire 51% Stake in Sri Lankan Prime Grameen Micro Finance for $5m, https://www.microcapital.org/ microcapital-brief-hatton- national-bank-hnb-of-sri- lanka-to-acquire-51-stake-in- sri-lankan-prime-grameen- micro-finance-for-5m/

MicroCapital Story, October 21, 2013, “Hatton National Bank of Sri Lanka to Establish Microfinance Subsidiary,” http://www. microcapital.org/microcapital- brief-hatton-national-bank-of- sri-lanka-to-establish- microfinance-subsidiary/

MicroCapital Story, July 30, 2013, “Government of Sri Lanka Proposes Long-Delayed Regulations for Microfinance Institutions (MFIs),” https://www.microcapital.org/microcapital- brief-government-of-sri-lanka- proposes-regulations-for- microfinance-institutions- mfis/

MicroCapital Story, October 12, 2010, “Hatton National Bank (HNB) of Sri Lanka Reportedly Increases Impact Through “Village Awakening” Microfinance Program,” https://www.microcapital.org/ microcapital-brief-hatton- national-bank-hnb-of-sri- lanka-reportedly-increases- impact-through-village- awakening-microfinance- program/

MicroCapital Universe Profile: Hatton National Bank (HNB), http://www.microcapital. org/microfinanceuniverse/tiki- index.php?page=Hatton+ National+Bank+%28HNB%29

MicroCapital Universe Profile: Prime Grameen Micro Finance, http://www. microcapital.org/ microfinanceuniverse/tiki- index.php?page=Prime+Grameen+ Micro+Finance

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