Government responds to Fitch concerns on banking sector

COLOMBO (News 1^st) - Fitch Rating in a special report said that Sri Lanka's large state banks are short of fresh capital to meet a full implementation of BASEL III requirements by 2019. Basel III is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks. According to Ceylon Today, the Government said yesterday that all Sri Lankan Banks, both State and Private were well- equipped to meet Capital Adequacy Ratios and that there was no reason for panic. Speaking to the newspaper State Minister for Finance, Eran Wickremaratne had said the Banks will be well capitalized with the passage of time. He had also stated that it was the responsibility of the Government to have the three State Banks well capitalized and that the Government would be well on its way towards that target. The statement made by the state minister does not clarify as to whether the state banks are currently in a position to fulfill the Capital Adequacy ratio or whether they expect to be able to do so in the future. Our attempts to seek clarity from the state minister in this regard were unsuccessful.