Prospectus for the Debenture - Asha Phillip Securities Limited - Sri ...

` 

ISSUE OF 40,000,000 UNSECURED SUBORDINATED REDEEMABLE FIVE YEAR 

DEBENTURES AT AN ISSUE PRICE OF LKR 100 EACH 

(WITH AN OPTION TO ISSUE UPTO A FURTHER 10,000,000 OF THE SAID 

DEBENTURES IN THE EVENT OF AN OVER SUBSCRIPTION OF THE 40,000,000 

DEBENTURES) 

TO BE LISTED ON THE MAIN BOARD 

OF THE DEBT SECURITIES TRADING SYSTEM OF 

THE COLOMBO STOCK EXCHANGE 

ISSUE OPENS ON 29 th NOVEMBER 2011 

Managers and Bankers to the issue 

Bank Of Ceylon 

No 04 

Bank Of Ceylon Mawatha 

Colombo 01 

Tel: 2542167 

2448348 

2446790-811

THE COLOMBO STOCK EXCHANGE (CSE) HAS 

TAKEN REASONABLE CARE TO ENSURE FULL AND 

FAIR DISCLOSURE OF INFORMATION IN THIS 

PROSPECTUS. HOWEVER, THE CSE ASSUMES NO 

RESPONSIBILITY FOR THE ACCURACY OF THE 

STATEMENT MADE, OPINIONS EXPRESSED OR 

REPORTS INCLUDED IN THE PROSPECTUS. 

MOREOVER, THE CSE DOES NOT REGULATE THE 

PRICING OF THE DEBENTURE, WHICH IS DECIDED 

SOLELY BY THE ISSUER.

This Prospectus is dated 15 th November 2011. 

PROSPECTUS 

This Prospectus has been prepared by the Bank of Ceylon (hereinafter sometimes referred to as 

“BOC “or “the Bank”). BOC and its Directors confirm that to the best of our knowledge and belief, the 

information contained herein is true and correct in all material respect and that there are no other 

material facts, the ommission of which would make any statement herein misleading. While BOC has 

taken reasonable care to ensure full and fair disclosure, it does not assume responsibility for any 

investment decision made by the investors based on the information contained herein. In making 

investment decisions prospective investors must rely on their own examination and assessments on 

BOC and the terms of the Issue, including the risks associated. 

No dealer, sales person or any other person has been authorized to give any information or to make 

any representation in connection with the Debentures other than the information and representations 

contained in this Prospectus and if given or made such information or representations must not be 

relied upon as having been authorized by BOC. 

The Managers, Sponsors and registrars to the Issue, Trustee, Lawyers to the Issue and the Rating 

Agency have given their written consent for the inclusion of their names and their reports/statements 

in the Prospectus. 

This Prospectus has not been registered with any authority within or outside Sri Lanka. 

The delivery of this Prospectus shall not under any circumstance constitute a representation 

or create any implication or suggestion that there has been no material change in the affairs 

of Bank of Ceylon since the date of this Prospectus. 

If you are in any doubt regarding the contents of this document or if you require any clarification or 

advice you may consult your Stockbroker, Bank Manager, Lawyer or any other Professional Advisor in 

this regard.

This Prospectus is dated 15 th November 2011. 

PROSPECTUS 

This Prospectus has been prepared by the Bank of Ceylon (hereinafter sometimes referred to as 

“BOC “or “the Bank”). BOC and its Directors confirm that to the best of our knowledge and belief, the 

information contained herein is true and correct in all material respect and that there are no other 

material facts, the ommission of which would make any statement herein misleading. While BOC has 

taken reasonable care to ensure full and fair disclosure, it does not assume responsibility for any 

investment decision made by the investors based on the information contained herein. In making 

investment decisions prospective investors must rely on their own examination and assessments on 

BOC and the terms of the Issue, including the risks associated. 

No dealer, sales person or any other person has been authorized to give any information or to make 

any representation in connection with the Debentures other than the information and representations 

contained in this Prospectus and if given or made such information or representations must not be 

relied upon as having been authorized by BOC. 

The Managers, Sponsors and registrars to the Issue, Trustee, Lawyers to the Issue and the Rating 

Agency have given their written consent for the inclusion of their names and their reports/statements 

in the Prospectus. 

This Prospectus has not been registered with any authority within or outside Sri Lanka. 

The delivery of this Prospectus shall not under any circumstance constitute a representation 

or create any implication or suggestion that there has been no material change in the affairs 

of Bank of Ceylon since the date of this Prospectus. 

If you are in any doubt regarding the contents of this document or if you require any clarification or 

advice you may consult your Stockbroker, Bank Manager, Lawyer or any other Professional Advisor in 

this regard.

CORPORATE INFORMATION 

Issuer : Bank of Ceylon 

Legal Form : A Banking Corporation domiciled in Sri 

Lanka, Duly incorporated on 1 August 1939 under 

the Bank of Ceylon Ordinance No 53 of 1938. 

Registered Office & Head Office : Bank of Ceylon 

No. 04, Bank of Ceylon Mawatha 

Colombo 01 

Tel : +94 11 2446790-811 

Fax : +94 11 2338741-55 

E-mail : gm@boc.lk 

Website : http://www.boc.lk 

Branch Offices : Refer Annexure 1V 

Board of Directors : Dr Gamini Wickramasinghe (Chairman) 

Mr.S.R Attygalle 

Mr. Raju Sivaraman 

Ms. Nalini Abeywardene 

Mr. Chandrasiri de Silva 

Mr. K.L.Hewage 

Mr. V Kanagasabapathy (Alternate Director to 

Mr.S.R Attygalle) 

Secretary to the Board : Mrs. Janaki Senanayake Siriwardane 

Lawyers : Mr. K. Jinadasa Gamage Chief Legal Officer of 

Bank of Ceylon and his Assistants 

Auditors/Reporting Accountants : The Auditor General of Sri Lanka 

Trustee to the Issue : Deutsche Bank AG, Colombo Branch 

No. 86 Galle Road 

Colombo 03 

Bankers to the Issue : Bank of Ceylon 

Corporate Branch 


Colombo 01 

Tel: 2471613, 2345428 

Rating Agency : Fitch Ratings Lanka Ltd. 

No 15-04 East Tower 

World Trade Center 

Colombo 01 

Tel: 2541900 

Managers, Sponsors & Registrars : Bank of Ceylon 

to the Issue Investment Banking Division 

23 rd Floor 


Colombo 01 

Tel: 2 542 167 

2 448 348 

2 446 790-811

SALIENT FEATURES AT A GLANCE 

Instrument : Unsecured Subordinated Redeemable Five (05) Year 

Debentures, categorized as Debentures of Type A ,B and 

Type C as described below. These debentures will be listed 

on the main board of the Debt System of the Colombo Stock 

Exchange. 

Type A 

Unsecured Subordinated Redeemable Five (05) Year 

Debentures, of LKR 100 each bearing nominal interest at a 

fixed rate of Eleven percent (11%) per annum on the 

Principal sum payable annually (AER 11%) at the expiry of 

every One (01) year period from the date of allotment of the 

Debentures. 

Type B 

Unsecured Subordinated Redeemable Five (05) Year 

Debentures, of LKR 100 each bearing nominal interest on 

the Principal sum at a floating rate calculated on the basis 

set out below, payable bi-annually at the expiry of every Six 

(06) month period from the date of allotment of the 


Type C 

Unsecured Subordinated redeemable Five (05) Year 

Debentures, of LKR 100 each bearing nominal interest at a 

fixed rate of Ten and half percent (10.5%) per annum (AER 

10.77%) on the Principal sum payable bi-annually at the 

expiry of every Six (06) month period from the date of 

allotment of the Debentures.(For foreigners) 

Non residents can apply only for Type C debentures 

Face value of each Debenture : Types A,B and C – LKR 100 

Issue Price : All types of Debentures will be issued at LKR 

100 each. 

Amount to be raised : LKR 4.0 Billion with an option to raise up to a 

Further sum of LKR 1.0 Billion in the event of an full 

subscription of Rs.4.0 Billion. 

Rate of Interest : Type A 

A fixed nominal rate of Eleven per cent (11%) per annum 

(AER 11%) on the Principal sum payable annually at the 

expiry of every One (01) year period from the date of 

allotment of the Debentures. 

Type B 

A floating nominal rate of interest equivalent to Seventy Five 

basis points (0.75%) above the Weighted Average Six (06) 

Months Treasury Bill interest rate (Before Tax) at the Primary 

Auctions as announced by the Central Bank of Sri Lanka at 

the preceding week of the interest resetting date for each bi-

Opening Date : 29 th November 2011 

annual period. This rate will be initially decided on the date of 

allotment of the Debentures and be applicable for a period of 

Six (06) Months commencing from the date of allotment of 

the Debentures and thereafter to be determined/revised biannually 

at the expiry of every Six (06) Month period from the 

date of allotment of the Debentures on the same basis. The 

interest rates so established shall be notified by BOC to the 

CSE and the Trustee prior to the commencement of each biannual 

period. 

Provided that if such Weighted Average Six (06) Months 

Government of Sri Lanka Treasury Bill interest rate has not 

been announced at the preceding week of the interest 

resetting date for a particular bi-annual period, then BOC 

shall in consultation with the Trustee calculate the interest 

rate applicable for that bi-annual period based on the 

Weighted Average Six (06) Months Treasury Bill interest rate 

(before Tax) at the last Primary Auction as 

announced/published by the Central Bank of Sri Lanka 

before the interest resetting date. The interest rates so 

established shall be notified by BOC to the CSE prior to the 

commencement of the particular bi-annual period. 

Interest payments shall fall due bi-annually at the expiry of 

every six (06) month period from the date of allotment of the 


Type C 

A fixed nominal rate of Ten and half per cent (10.5%) per 

annum (AER 10.77%) on the Principal sum payable biannually 

at the expiry of every Six (06) month period from the 

date of allotment of the Debentures.(For foreigners) 

Closing Date : 15 th December 2011 or such earlier date on which the initial 

40,000,000 Debentures are over subscribed or the date on 

which the entire 50,000,000 Debentures are fully subscribed 

or such other earlier date in terms of this prospectus. 

Basis of Allotment : In the event of an over subscription the basis of allotment will 

be decided by the General Manager of BOC within 7 market 

days from the date of closure of the issue. 

Minimum Subscription : The minimum subscription per application is LKR 10,000 or 

100 debentures. 

Applications in excess of the minimum Subscription shall 

be in multiples of Rupees Ten Thousand (LKR 10,000) or 

Hundred (100) Debentures 

Date of Maturity : On completion of Five (05) years from the date of allotment 

of the Debenture

TABLE OF CONTENTS 

Page Nos 

1. Definitions /Abbreviations and interpretation 01 

2. Information Concerning the Issue 03 

2.1 Invitation to subscribe 03 

2.2 Subscription List 04 

2.3 Objectives of the Issue 04 

2.4 Interest 04 

2.5 Payment of the Principal Sum and Interest 05 

2.6 Redemption 05 

2.7 Trustee to the Issue 06 

2.8 Rights of the Debenture holders 06 

2.9 Risk factors specifically associated with the debentures 06 

2.10 Benefits of Investing in the Debentures 07 

2.11 Transfer of the Debentures 07 

2.12 Listing 08 

2.13 Rating of the Instrument 08 

2.14 Transactions with Directors/Promoters 08 

3. Procedure for Application 09 

3.1 Prospectus and application forms 09 

3.2 Who may apply 09 

3.3 How to apply 09 

3.4 Mode of payment 11 

3.5 Rejection of Applications 11 

3.6 Allotment of Debentures 12 

3.7 Unsuccessful Applications 12 

3.8 Refunds 12 

4. Overview of the Bank 14 

4.1 Historical Overview 14 

4.2 Principal Activities 22 

4.3 Stated Capital 23 

4.4 Patents, Brands and Trade Marks 26 

4.5 Degree of Dependence on Key Customers 30 

4.6 Research and Development 30 

4.7 Subsidiary and Associate Companies 31 

4.8 Employees 32 

4.9 Take over Offers 32 

4.10 Tax Concessions and Tax Exemptions 32 

4.11 Dividend policy of the bank 32 

4.12 Financial Ratio 33 

5 The Board of Directors 34 

5.1 Details of the Board of Directors 34 

5.2 Directors’ Shareholding 37 

5.3 Directors’ Interest 37 

5.4 Directors’ Remuneration 37 

6 Extracts from the Corporate Governance Practices 38

7 Corporate Management 54 

8. Properties 56 

9. Statutory & Other General Information 57 

9.1 Inspection of Documents 57 

9.2 Brokerage 57 

9.3 Trustee Fees 57 

9.4 Expenses of this Issue 57 

9.5 Underwriting 57 

9.6 Material Contracts 57 

9.7 Litigation, Disputes and Contingent Liabilities 57 

Declaration by the Directors 58 

Declaration by the Bank 59 

Declaration by the Managers to the Issue 59 

Extracts from the Bank Of Ceylon Ordinance - Annexure I 

Trust Deed - Annexure II 

Rating Report - Annexure III 

BOC Branch Network - Annexure IV 

Members and Trading Members of the Colombo Stock Exchange and Custodian Banks- 

Annexure V 

Details of Properties - Annexure VI 

Report of the Auditor General - Annexure VII 

Financial Statements for the year ended 31 December 2010 - Annexure VIII 

Five year Summary of the Balance sheet, Profit and Loss Account – Annexure IX 

Interim Financial Statements Half year ended 30 th June 2011 – Annexure X 

Director’s Interest in contracts - Annexure XI

1. DEFINITIONS / ABBREVIATIONS AND INTERPRETATIONS 

In this prospectus the following DEFINITIONS / ABBREVIATIONS and INTERPRETATIONS apply 

unless the subject or context otherwise requires. 

BOC /THE BANK : Bank of Ceylon 

DATE OF ALLOTMENT : The date on which the Debentures will be allotted to the 

debenture holders in terms of this prospectus. 

DATE OF CLOSURE OF THE ISSUE : The date on which the issue will be closed which shall be 

either 15 th December 2011.or such earlier date on which 

the initial 40,000,000 Debentures are fully subscribed or 

the date on which the entire 50,000,000 Debentures are 

fully subscribed or such other earlier date in terms of this 

prospectus. 

DATE OF MATURITY : On completion of Five (05) years from the date of 


DEBENTURE : All types of Unsecured Subordinated redeemable Five 

(05) Year Debentures to be issued pursuant to this 

Prospectus at an Issue price of LKR 100 each. 

DEBENTURE HOLDERS : The holders of the Debentures for the time being whose 

names are entered as holders of the Debentures in the 

Register or whose accounts are deposited with the 

debentures at the CDS as at the relavent date. 

DUE DATE OF INTEREST : The dates on which the interest payments shall fall due 

in respect of the Debentures. 

Interest payments shall fall due in respect of Debenture 

of, 

Type A, annually at the expiry of every One (01) 

year period from the date of allotment of the 


B O C DEBENTURE PROSPECTUS 

1 

Type B, bi-annually at the expiry of every Six 

(06) month period from the date of allotment of 

the Debentures. 

Type C, bi-annually at the expiry of every Six 

(06) month period from the date of allotment of 


The first of such interest payment shall fall due in respect 

of Debentures of Type A on the date of expiry of One 

(01) year and in respect of Debentures of Type B and C 

on the date of expiry of Six (06) months from the date of 

allotment of the Debentures, interest payments shall be 

made by BOC within Five (05) market days from the due 

dates. 

The final interest payments in respect of Debentures of 

Types A, B and C shall be made with the repayment of 

the Principal sum on the date of maturity/redemption of 

the debentures. 

Interest calculation shall be based upon the actual 

number of days in each interest payment period 

(Actual/Actual).

LKR : Sri Lankan Rupees 

MN : Million 

BN : Billion 

AER : Annual Effective Rate 

POA : Power of Attorney 

In order to accommodate the Debenture interest cycles 

in the Debt Securities Trading system of the CSE the 

payment of interest shall not include Debenture holders 

holding debentures in the CDS as at the last day of the 

payment cycle but one day prior to the due date of 

interest (entitlement date). If the entitlement date is a 

holiday interest shall be calculated including the 

entitlement date. 

REDEMPTION : Repayment of the principal monies on these Debentures 

REGISTER : The Register of the Debenture Holders to be kept by BOC 

SEC : Securities & Exchange Commission of Sri Lanka 

CSE : Colombo Stock Exchange 

CDS : Central Depository Systems (Pvt) Limited 

DEX : Debt Securities Trading System of the 

Colombo Stock Exchange 

TRUSTEE : Deutsche Bank AG, Colombo branch 

TRUST DEED Trust Deed executed between Bank of Ceylon and the 

Deutsche Bank AG, Colombo branch on on 9 th 

November 2011 bearing No 02/2011 (Annexure II) 

UNSECURED : Repayment of the principal and interest on these 

Debentures not being secured by any specific asset of 

Bank of Ceylon. 

WORKING DAY : Any day (other than a Saturday or a Sunday or any 

statutory holiday) on which the Banks and Foreign 

Exchange markets are open for business in Sri Lanka. 

MARKET DAY : Any day on which trading takes place at the CSE. 

SUBORDINATE : The Claims of the Debenture holders shall in the event of 

winding up of BOC, rank after all the claims of the 

Secured and Unsecured Creditors of BOC and any 

preferential claims under any Statutes governing BOC 

but in priority to and over the claims and rights of the 

Shareholder of BOC. 

TIER II CAPITAL : Supplementary capital representing revaluation reserves, 

general provisions and other capital instruments which 

combine certain characteristics of equity and debt sucas 

hybrid capital instruments and subordinated term debts. 


2

2. INFORMATION CONCERNING THE ISSUE 

2.1 Invitation to Subscribe 

The Board of Directors of the Bank of Ceylon (hereinafter referred to either as “BOC” or 

“Bank”) by a resolution passed on 15 th September 2011 resolved to borrow a sum up to LKR 

5.0 Billion from the public by the issue of Unsecured Subordinated Redeemable Five Year (5year) 


BOC hereby invites the public to make applications for the subscription of 40,000,000 (Forty 

Million) Unsecured Subordinated Redeemable Five Year (5-year) debentures at an issue 

price of LKR 100 each payable in full as outlined in this Prospectus, with an option to issue up 

to a further 10,000,000 (Ten Million) Debentures in the event of an over subscription of the 

40,000,000 Debentures. 

BOC invites applications for three (03) types of Debentures described below, which shall rank 

equal and pari passu with each other, without any preference or priority one over the other 

except for the interest coupon offered and the frequency at which the interest is paid. 

Debenture Types/categories 

TYPE A Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR 

100 each bearing interest at a fixed rate of eleven per cent (11%) per annum 

on the Principal sum payable annually at the expiry of every One (01) year 

period from the date of allotment of the Debentures. 

TYPE B Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR 

100 each bearing interest on the Principal sum at a floating rate calculated on 

the basis set out in Clause 2.4 of this Prospectus, payable bi-annually at the 

expiry of every Six (06) month period from the date of allotment of the 


TYPE C Unsecured Subordinated Redeemable Five Year (5-year) debentures of LKR 

100 each bearing interest at a fixed rate of ten and half per cent (10.5%) per 

annum on the Principal sum payable bi-annually at the expiry of every Six 

(06) month period from the date of allotment of the Debentures 

Non residents can apply only for Type C debentures. 

The tenure of these Debentures will be five (05) years from the date of allotment of the 

Debentures 

The repayment of the Principal and Interest on these Debentures are not being secured by 

any specific assets of BOC. 

These Debentures will be listed on the Main Board of the Debt Trading System of the CSE. 

The rights of the Debenture holders for receipt of the Principal Sum and any accrued interest 

on these Debentures in the event of winding up of BOC would be subordinated to the rights of 

the Secured and other Unsecured Creditors of BOC and any preferential claims under any 

statutes governing BOC. Therefore the claims of these Debenture holders shall in the event of 

winding up of BOC rank after all the claims of the Secured and other Unsecured Creditors of 

BOC and any preferential claims under any statutes governing BOC but in priority to and over 

the claims and rights of the shareholder of BOC. 


3

2.2 Subscription List 

Subject to the provisions contained below, the subscription list for the Debentures will open at 

9.30 a.m. on 28 th November 2011 and shall remain open for 14 market days until closure at 

4.30 p.m. on 15 th December 2011 

In the event of an over-subscription of the 40,000,000 Debentures, the subscription list will 

close at 4.30 p.m. on the same day on which it is fully subscribed, with the notification of CSE, 

unless otherwise decided by the Bank to keep the subscription list open until subscription of a 

further 10,000,000 Debentures or part there of as may be decided by the Bank. In such event 

the subscription list will close at 4.30 p.m. on the day on which a further 10,000,000 

Debentures or part thereof as may be decided by the Bank have been subscribed, with the 

notification of CSE or on 15 th December 2011 whichever is earlier. 

Applications may be made forthwith. Duly completed applications in the manner set out under 

the Procedure for Application in Section 3 on page 9 of this Prospectus will be accepted. 

2.3 Objectives of the Issue 

2.4 Interest 

a) To increase the Tier II capital of the Bank in order to enhance its Capital 

Adequacy Ratio and Single Borrower Limit. 

b) To strengthen the Bank’s liquidity position by raising liquid funds. 

c) To minimize the risk and gap exposure in the Bank’s assets/liability portfolios. 

d) To provide an opportunity for the investors to yield attractive regular returns over a 

period of five years. 

Proceeds will be utilized mainly for expansion of loan book and reduction of short 

term borrowings which will depend on the market conditions such as interest rate 

movments, liquidity, demand for credit etc. 

Interest payable in respect of Debentures of Types A, B and C shall be as follows: 

Type A Interest on these debentures shall be paid at a fixed rate of Eleven percent 

(11%) per annum on the principal sum annually at the expiry of every One 

(01) year period from the date of allotment of the Debentures. 

Type B Interest on these Debentures shall be paid on the Principal sum at a floating 

rate equivalent to Seventy Five basis points (0.75%) above the Weighted 

Average Six (06) Months Treasury Bill Interest rate (Before Tax) at the 

Primary Auctions as announced by the Central Bank of Sri Lanka at the 

preceding week of the interest resetting date for each bi-annual period. This 

rate will be initially decided on the date of allotment of the Debentures and be 

applicable for a period of Six (06) Months commencing from the date of 

allotment of the Debentures and thereafter to be determined/revised biannually 

at the expiry of every Six (06) months period from the date of 

allotment of the Debentures on the same basis. The interest rates so 

established shall be notified by BOC to the Colombo Stock Exchange and the 

Trustee prior to commencement of each bi-annual period. 

Provided that if such Weighted Average Six (06) months Government of Sri 

Lanka Treasury Bill Interest Rate has not been announced at the preceding 

week of the interest resetting date for a particular bi-annual period, then BOC 

shall in consultation with the Trustee calculate the interest rate applicable for 


4

that bi-annual period based on the Weighted Average Six (06) months 

Treasury Bill Interest rate (Before tax) at the last Primary Auction as 

announced/published by the Central Bank of Sri Lanka before the interest 

resetting date. The interest rates so established shall be notified by BOC to 

the Colombo Stock Exchange prior to the commencement of the particular biannual 

period. 

Interest payments shall fall due bi-annually at the expiry of every Six (06) 

month period from the date of allotment of the Debentures. 

Type C Interest on these debentures shall be paid at a fixed rate of Ten and half 

percent (10.5%) per annum on the principal sum bi-annually at the expiry 

of every Six (06) month period from the date of allotment of the Debentures. 

The first of such interest payments shall fall due in respect of Debentures of Type A on the 

date of expiry of One (01) year and in respect of Debentures of Type B and C on the date of 

expiry of Six (06) months from the date of allotment of the Debentures. Interest payments 

shall be made within Five (05) market days from the due dates. The final interest payments 

in respect of Debentures of Types A, B and C shall be made with the repayment of the 

Principal sum on the date of maturity/redemption of the Debentures. 

In order to accommodate the debenture interest cycles in the Debt Security Trading System 

of the CSE the payment of interest shall not include debenture holders holding Debentures in 

the CDS as at the last day of the payment cycle but one day prior to the due date of 

interest (entitlement date). If the entitlement date is a holiday interest shall be calculated 

including the entitlement date. 

Interest calculation shall be based upon the actual number of days in each interest payment 

period (actual/actual). 

2.5 Payment of the Principal Sum and Interest 

(a) Payment of the principal sum and interest on the Debentures will be made after deducting any 

withholding tax and any other taxes and charges thereon (if any) in Sri Lankan Rupees to the 

Debenture holders registered as at the due date of interest/Principal sum and will be sent by 

ordinary post to the addresses of debenture holders recorded with CDS through the post at 

the risk of such Debenture holders, by crossed cheques marked “Account Payee Only” or pay 

to a bank account or otherwise through electronic fund transfer mechanism recognized by 

banking system as per information available with CDS or provided direct to BOC by the 

Debenture holders and such payment shall be deemed to be a payment duly made by BOC to 

the respective Debenture holders in redemption of the Debentures of such holders. 

(b) Withholding Tax 

As per the prevailing tax legislation in Sri Lanka, interest payments on the Debentures are 

subject to 10% withholding tax. 

In the case of corporate entities and other persons to whom such interest income constitute 

as “business income”, a credit for the tax withheld would be available on furnishing the 

withholding tax certificate. 

2.6 Redemption 

BOC shall redeem the Debentures of Types A,B and C at LKR 100 per Debenture and at the 

expiry of five (05) years from the date of allotment of the Debentures (i.e. on the date of 

maturity) or on such other earlier date on which the Debentures become payable in 

accordance with the provision contained in the Trust Deed (Annexure II). 


5

Repayment before the maturity of the Principal Sum of the Debentures or any part thereof in 

any circumstance shall be subject to the prior approval of the Debenture holders of 3/4 th of the 

face value of the Debentures outstanding at that time and the prior written consent of the 

Central Bank of Sri Lanka. 

2.7 Trustee to the Issue 

Deutsche Bank AG, Colombo branch has agreed in writing to act as the Trustee to this 

Debenture Issue and has issued a consent letter to this effect. The Bank and the Trustee 

have executed a Trust Deed as per Annexure II. The Debenture holders in their application 

for subscription will be required to, irrevocably authorize the Trustee, subject to any overriding 

clauses in the Trust Deed to act as their agent in entering into such deeds, writings and 

instruments with the Bank and to act as the Trustee for the benefit of and Interest of the 

Debenture holders on the terms and conditions contained in the said Trust Deed. 

The rights and obligations of the Trustee are set out in the Trust Deed, which is enclosed as 

Annexure II to this prospectus. 

2.8 Rights and Obligations of the debenture holders 

a) Debenture holders are entitled to the following: 

Receiving the Principal Sum at maturity and interest on the Debentures as per Section 2.4 

of this Prospectus. 

Ranking above the shareholder (Government of Sri Lanka) in the event of liquidation 

Calling and attending meetings of the Debenture holders as set out in the Trust Deed. 

b) Debenture Holders are not entitled to the following: 

Attending and voting at the meetings of the holders of the other Debentures issued by the 

Bank. 

Sharing in the profits of the Bank. 

Participating in any surplus in the event of liquidation. 

c) Holders of other Debt Securities have the same right as above 

2.9 Risk factors specifically associated with the Debentures 

Subscribers to the Debentures will be exposed to the following risks: 

(It is vital to note however that these risks are not unique to BOC Debentures and apply 

generally to any unsecured fixed income security, fixed deposit or any other term or money 

deposit) 

(i) Interest Rate Risk 

The price of a typical Debenture will change in the opposite direction to a change in the 

market interest rates assuming all other factors are equal. “Market Interest Rate” refers to 

interest rate expected by the investors for investments with similar maturity and risk profile. As 

market interest rates rise, price of the Debenture may fall and as market interest rates fall, the 

price of the Debenture may rise. If an investor sells a Debenture prior to maturity when 

market interest rate is higher than BOC Debenture interest rates, the investor may incur a 

capital loss. Similarly, if an investor sells a Debenture prior to maturity when market interest 


6

ate is lower than the BOC Debenture interest rate, then the investor may receive a capital 

gain. This uncertainty is known as interest rate risk. 

Further, if the six months Treasury Bill rate plus 75 basis points rise above the fixed rate of 

the debentures, the floating rate investor will gain more than the fixed rate investor whilst if 

the six month Treasury Bill rate plus 75 basis points fall below the fixed rate of the Debenture, 

the floating rate investor would earn an interest below the fixed rate investor. 

(ii) Reinvestment Risk 

BOC shall pay interest on the Debentures of Type A annually and Type B and C bi-annually. 

The investor may decide to reinvest this interest payment and earn interest on interest. 

Depending on the prevailing market interest rates, the Debenture holder may be able to 

reinvest the paid interest at a higher or lower interest rate than that is offered by the BOC 

Debenture. This uncertainty is known as “reinvestment risk “. 

(iii) Default Risk 

Default risk also known as Credit risk, refers to the risk that the issuer of a Debenture may 

default. I.e. the issuer will be unable to pay interest and principal when due. It is advisable for 

prospective BOC Debenture investors to take into account past earnings and asset growth 

performance of BOC, present financial strengths as reflected in the Balance Sheet of the 

Bank, its Risk Management Policies, Fitch Rating of AA+(lka) for BOC, and the highly 

experienced and skilled Directors and Senior Management Team and finally state ownership 

when forming an opinion on Default Risk. 

(iv) Liquidity Risk 

Liquidity Risk refers to the ability to encash the Debenture by selling it since the initial 

placement. As the Debenture instrument is listed on the CSE, investors will be able to sell 

them in the secondary market at any given point of time and convert them to cash. Hence the 

BOC Debentures carry low liquidity risk. 

2.10 Benefits of investing in the Debentures 

An attractive interest income for a period of five years. 

Opportunity to realize capital gain according to interest rate fluctuations in the financial 

markets. 

Capacity to exit from the investment at any time. 

Can be used as collateral to obtain credit facilities from banks and financial institutions. 

2.11 Transfer of the Debentures 

a. These Debentures shall be freely transferable and the registration of such transfer 

shall not be subject to any restriction, save and except to the extent required for 

compliance with statutory requirements. 


7

2.12 Listing 

b. The Debentures shall be transferable and transmittable through the CDS as long as 

the Debentures are listed in the CSE. Subject to the provisions contained herein 

BOC may register without assuming any liability any transfer of Debentures, which 

are in accordance with the statutory requirements and rules and regulations in force 

for the time being as laid down by the CSE, SEC, and the CDS. 

c. In the case of the death of a Debenture holder, 

the survivor where the deceased was a joint holder; and 

the executors or administrators of the deceased or where the administration of the 

estate of the deceased is in law not compulsory, the heirs of the deceased where 

such Debenture holder was the sole or only surviving holder; shall be the only 

persons recognized by BOC as having any title to his/her Debentures. 

d. Any person becoming entitled to any Debenture in consequence of bankruptcy or 

winding up of any Debenture holder, upon producing proper evidence that he/she 

sustains the character in respect of which he/she proposes to act or his/her title as 

the Board of Directors of BOC thinks sufficient, may at the discretion of the Board be 

substituted and accordingly registered as a Debenture holder in respect of such 

Debentures subject to the applicable laws, rules and regulations of BOC, CDS, CSE 

and SEC. 

e. No change of ownership in contravention to these conditions will be recognized by 

BOC. 

An application has been made to the CSE for permission to deal in and obtain a listing for 

these Debentures. Such permission will be granted when the Debentures are listed on the 

Main Board of the Debt System of the CSE. However the CSE assumes no responsibility for 

the accuracy of the statements made or opinions expressed or reports included in this 

prospectus. Admission to the Main Board is not to be taken as an indication of the merits of 

BOC or of these debentures. 

2.13 Rating of the Instrument 

Fitch Ratings Lanka Ltd (FRLL) has assigned an AA(lk) rating to the Debenture instrument. 

The Rating report issued by FRLL is set out in Annexure III. 

2.14 Transactions with Directors/Promoters 

Bank has not undertaken any special transactions with Directors /promoters except for arm 

length transaction done at the ordinary course of business within two proceeding year of 

Prospectus. Accordingly this negative confirmation includes all transactions fall under section 

3.2.17 of listing rules. 


8

3. PROCEDURE FOR APPLICATION 

3.1 Prospectus and Application Forms. 

Copies of the Prospectus and the Application Forms may be obtained free of charge from the 

following places/Institutions: - 

a) Registered Office/Head Office of the Bank. 

b) All Branches of the BOC listed in Annexure IV 

c) Member firms and Trading Members of the Colombo Stock Exchange and custodian banks 

listed in Annexure V. 

3.2 Who may apply? 

Applications are invited for the subscription of the Debentures from the following categories of 

applicants: 

a) Individuals who are resident in Sri Lanka and above 18 years of age. 

b) Corporate bodies and societies registered / incorporated / established in Sri Lanka and 

authorized to invest in Debentures. 

c) Approved provident funds, trust funds and contributory pension schemes 

registered/incorporated / established in Sri Lanka and authorized to invest in Debentures. 

In the case of approved Provident Funds, Trust Funds and approved contributory Pension 

Schemes, the applications should be in the name of the Trustee/Board of Management in 

order to facilitate the opening of the CDS accounts. 

d) Foreign institutional investors, corporate bodies, incorporated out side Sri Lanka and 

individuals resident out side Sri Lanka. They can apply only for Type C debentures. 

Applications will not be accepted from individuals who are under the age of 18 years or in the 

name of sole proprietorships, partnerships or unincorporated trusts. 

“Individuals resident outside Sri Lanka”shall have the same meaning as in the notice 

published under the exchange control act in gazette no. 15007 dated 21/04/1972. 

3.3 How to Apply 

a) Applications should be made on the Application Forms, issued with the Prospectus. (Exact 

size photocopies of the Application Forms too would be accepted.) Care must be taken to 

follow the instructions given in the Application Form. Applicants using photocopies are 

requested to inspect the Prospectus, which is available for inspection and also issued free of 

charge at the collection points listed in Annexure IV & V. 

Applications that do not strictly conform to such instructions and the other 

instructions set out below or which are illegible will be rejected. 

b) Applications should be made for a minimum of one hundred (100) Debentures (LKR 10,000). 

Applications exceeding 100 Debentures should be in multiples of 100 Debentures (LKR 

10,000). Applications for less than 100 Debentures or for a number, which is not in multiples 

of 100 Debentures, will be rejected. 


9

c) Only one type of Debentures should be applied per Application form. Investors may apply for 

different types of Debentures on separate application forms using exact size photocopies. If 

several applications are received under one type of Debenture from single customer that 

would be considered as multiple application. The Bank/ Managers to the issue reserve the 

right to decide on and reject multiple applications at their discretion 

d) If the ownership of the Debentures is desired in the name of one individual, full detail should 

be given under the heading SOLE/FIRST APPLICANT in the application form, in the case of 

joint applicants, the signatures and particulars in respect of all applicants must be given under 

the relevant headings. 

e) Applications by Companies, Corporate bodies, Societies, approved Provident Funds, Trust 

Funds and approved Contributory Pension Schemes registered/incorporated/established in 

Sri Lanka should be made under their common seal or in any other manner as provided by 

their Articles of Association or such other constitutional documents of such applicant or as per 

the statutes governing them. In the case of approved Provident Funds, Trust Funds and 

approved Contributory Pension Schemes, the applications should be in the name of the 

Trustee/Board of Management in order to facilitate the opening of the CDS accounts. 

f) Companies/Corporate entities should state the Company Registration Number in the 

application form. 

Individuals should state their National Identity Card (NIC) Number in the Debenture 

Application Form. Passport Number will be accepted only when the NIC Number is not 

available. 

g) Any application form, which does not state the NIC, Passport or Company Registration 

Number and CDS account number as the case may be, will be rejected. 

h) In the case of the applications made under Powers of Attorney (POA) a copy of such POA, 

certified by a Notary Public should be attached with the Application Form. Original POA 

should not be attached. 

i) Applicants who wish to apply through their Margin Trading Account should submit the 

application in the name of the “Margin Provider / Applicant’s Name” signed by the margin 

provider. A copy of the Margin Trading Agreement should be attached with the Application 

Form. 

Margin Providers can apply under their own name and such applications will not be 

considered as multiple applications. 

j) Funds for the investments in debentures and the payment for debentures by the non resident 

investors should be made only out of funds received as inward remittances or available to the 

credit of “Securities Investment Account” (SIA) of the foreign investor opened and maintained 

in a licensed commercial Bank in Sri Lanka in accordance with directions given by the 

Controller of Exchange in that be half to commercial banks 

k) Application forms stating 3 rd party CDS Account Numbers, instead of their own CDS Account 

Numbers, except in the case of Margin Trading, will be rejected. 

l) Application Forms properly filled in accordance with the instructions thereof together with the 

remittance for the full amount payable on application should be enclosed in an envelope 

marked “BOC DEBENTURE ISSUE” on the top left hand corner in capital letters and 

dispatched by post or delivered by hand to the following address. 

Managers & Registrars to the Issue 

Investing Banking Division 

23 rd Floor 

Bank Of Ceylon 

No 4, Bank Of Ceylon Mawatha 

Colombo 01 


10

In the alternative Application forms may also be delivered by hand to the head office or to any 

branch of the Bank of Ceylon listed in Annexure IV or to any member firm or trading member 

of the CSE listed in Annexure V 

Applications sent by post or delivered to any places mentioned in Annexure IV and V should 

reach the office of the Managers and Registrars to the Issue at least by 4.30 p.m. on the third 

working day immediately upon the closure of the subscription list. Applications received after 

the said period will be rejected even though they have been delivered to any of the said 

places prior to the closing date or carry a postmark dated prior to the closing date. 

Applications delivered by hand to the managers & registrars to the issue after the closure of 

the issue will also be rejected. 

3.4 Mode of Payment 

1. Payment should be made separately in respect of each application only by way of cheques, 

bank draft or bank guarantee, as the case may be. Each Application Form should be 

accompanied by no more than one cheque, bank draft or bank guarantee. Application with 

two or more cheques, bank drafts, or bank guarantees will be rejected. Application Forms 

accompanied by cash will not be accepted. 

2. Cheques or Bank Drafts should be drawn upon any commercial bank in Sri Lanka and 

crossed “Account Payee Only” and made payable to “BOC Debenture Issue Account ”. 

The bank guarantee valied upto minimum of 14 days from the closing date of issue should be 

in a manner acceptable to BOC and should be issued by a commercial bank in Sri Lanka and 

payable on demand to “BOC Debenture Issue Account” 

3. Payments for applications for values above and inclusive of Sri Lankan Rupees One Hundred 

Million (LKR 100,000,000) should be supported by a Bank Guarantee. Cheques and Bank 

Drafts will not be accepted for values above and inclusive of Sri Lankan Rupees One 

Hundred Million (LKR 100,000,000) Applicants are advised to ensure that sufficient funds are 

available in order to honour the bank guarantees, inclusive of charges when called upon to do 

so by the Managers/registrars to the Issue. It is advisable that the applicants discuss with 

their respective bankers the matters with regard to the issuance of bank guarantees and all 

charges involved. All expenses inclusive of charges relating to Real Time Gross Settlements 

(RTGS) should be borne by the applicants. 

4. The amount payable should be calculated by multiplying the number of debentures applied for 

by the issue price of LKR 100 per debenture. If there is any discrepancy in the amount 

payable and the amount specified in the cheque/bank draft or bank guarantee, the application 

will be rejected. 

5. In the event that cheques are not realised prior to the date of deciding the basis of allotment, 

the monies will be refunded and no allotment of Debentures will be made. Cheques must be 

honoured on first presentation for the application to be valid. 

6. All cheques/bank drafts received in respect of the applications will be banked immediately 

after the closure of the subscription list. 

3.5 Rejection of Applications 

1. Application Forms and the accompanying cheques/bank drafts or bank guarantees, which are 

illegible or incomplete in any way and/or not in accordance with the terms, conditions and 

instructions, set out in this Prospectus will be rejected at the sole discretion of BOC. 

2. Applications from under the age of 18 years or in the names of sole proprietorships, 

partnerships of unincorporated trusts will also be rejected. 


11

3. Any application form, which does not state the NIC, Passport or Company Registration 

Number and CDS account number as the case may be, will be rejected. 

4. Applications delivered by hand to the managers and registrars to the issue after the 

subscription list is closed will be rejected. Applications received by post after 4.30 p.m. on the 

third working day immediately following the date of closure of the subscription list, will also be 

rejected even if they carry a post mark dated prior to the closing date of the subscription list. 

Applications delivered to any places mentioned in Annexure IV & V should also reach the 

office of the Managers/Registrars to the Issue at least by 4.30 p.m. on the third working day 

immediately upon the closure of the Subscription List. Applications received after the said 

duration will be rejected even though they have been delivered to any of the said places prior 

to the closing date. 

3.6 Allotment of Debentures 

The basis of Allotment will be decided by the Genaral Manager of BOC before the expiry of 

seven (07) market days from the closure of the Issue in the event of an over subscription. 

Applicants will be notified the respective allotments of the Debentures within 10 market days 

from the closure of the subcribtion list. 

No preferential allotments will be made by BOC with regard to any specific individual or entity. 

The allotments will be made in a fair manner. 

The directors of BOC reserve the right to refuse any application or to accept any application in 

part only, without assigning any reason therefore. 

3.7 Unsuccessful Application 

BOC shall refund payment due on applications fully or partly unallotted within Ten (10) market 

days excluding the date of closure of the issue. Applicants shall be entitled to receive interest 

at the rate of last quoted average weighted Prime lending rate (AWPLR) plus 5% for the 

delayed period on any refunds not made within this period. 

3.8 Refunds 

1. When an application is not accepted, subsequent to the cheque being realised the applicant’s 

money in full or where an application is accepted only in part, the balance of the applicant’s 

money will be refunded. If the applicant has provided accurate and complete details of his 

bank account in the application, the bank shall make such refund payments to the bank 

account specified by the applicant, through Sri Lanka Inter bank payment system (SLIPS) and 

payment advice will be sent. In the event of refunds over Rupees Five Million (Rs.5,000,000/-) 

or If the applicant has not provided accurate and correct details of his bank account in the 

application, the bank shall make such refund payment to the applicant by way of a cheque 

and sent by post at the risk of the applicants. In the case of joint applications, the cheques 

will be drawn in favour of the applicant’s name appearing first on the application form. Refund 

cheques on Debentures, which have not been allotted, will be posted before the expiry of Ten 

(10) market days excluding the date of closure of the subscription list. Applicants would be 

entitled to receive interest at the rate of last quoted average weighted prime lending rate 

(AWPLR) plus 5% for the delayed period on any refunds not made within this period. 


12

2 Debentures allotted will be directly uploaded to the respective CDS accounts given in the 

application before the expiry of eighteen (18) market days, from the date of closure of the 

subscription list. A written confirmation of the credit will be sent to the applicant within two 

market days of crediting the CDS account, by ordinary post to the address provided by each 

applicant in his or her respective applications. 

3. The BOC will submit to the CSE a ‘Declaration’ on direct upload to CDS on the market day 

immediately following the day on which the investor’s CDS accounts are credited with the 

securities. 


13

4. OVERVIEW OF THE BANK 

Vision of the Bank 

“Bankers to the Nation” 

Mission 

Customers: 

“Foster mutually rewarding relationships with all our customers, exceeding their expectations”. 

Staff: 

“Give all our staff, the recognition and rewards to be the best team of achievers in service 

excellence”. 

Owners: 

“ Be a profitable catalyst for equitable development covering urban and rural areas “. 

Society: 

“Provide world-class banking services across the nation as a beacon for progress and 

growth”. 

4.1 Historical Overview 

Bank of Ceylon (BOC) is the first state owned commercial bank in Sri Lanka established on 1 

August 1939 by a special statute, namely the Bank of Ceylon Ordinance No 53 of 1938. 

Today having more than seven decades of glorious existence, the Bank is firmly entrenched 

as Sri Lanka’s premier financial services organization offering a broad range of services 

consists of commercial banking, trade finance, development financing, mortgage financing, 

leasing financing, investment banking, corporate financing, dealing in government securities, 

pawn brokering, credit card facilities, off-shore banking, foreign currency operations and other 

financial services to consumers, corporate customers and the Government of Sri Lanka. 

Today the bank reached out circa 9 million customer accounts across all 24 districts through 

its 313 full service branches and 231 Extention Offices connected online. BOC’s network of 

382 ATMs serves the people 365 days 24 hours.It operates in 2 overseas locations,namely 

Maldives and Chennai.BOC has expanded its services through its representatives attached to 

the exchange houses in Qatar,The United Emirates,Kuwait,Bahrain,Oman,The Kindom of 

Saudi Arabia,Israel,Jordan,Italy,South Korea,France and Japan.BOC represents the highest 

worldwide net work with 995 correspondence banks and exchange houses. 

M/s Fitch Rating Lanka Ltd has revised BOC’s out look to positive from stable and 

simultaneously affirmed its national long term rating at AA+(lka),reflecting bank’s strong 

financial profile in terms of capital base,profitability and assets quality. 

BOC is the market leader or holds significant market shares in Loans & Advances, Deposits, 

NRFC Accounts, Inward foreign exchange remittances, Off- shore banking, Treasury products 

and Micro-banking. 

The bank is managed along the following segments and product lines – 

Consumer Group – Consumer Lending & Finance (Real Estate/Mortgages, Student Loans, 

Auto Loans); Retail Distribution & Banking (Branches); Commercial Business (SMEs & Middle 

Market Commercial Banking); Micro finance; Development Banking, Leasing, Islamic 

Banking. 

Corporate Banking Group - Debt based products (Term Loans, Overdrafts, Project Finance, 

Leasing, etc) and Transaction Services (Cash Management, Trade Services, Agency 

Services) for SMEs and Corporates. 


14

Treasury Operations – Foreign Exchange, Money Market, Local & Foreign Currency Funding, 

Fixed Income & Equity Trading; Correspondent Banking, Investment Banking. 

BOC also has twelve Subsidiaries including Bank of Ceylon UK limited and six Associate 

Companies in the areas of property development, merchant banking, leasing & finance, 

hotels, travel, unit trust and stock brokering. 

Indicating its dominance of the Sri Lankan economy, BOC has the largest asset base 

approximating LKR 715 Billion by year ended 2010, which represented approximately 24% of 

the total assets held by the commercial banks in the country. The capital base of the Bank as 

at 31 December 2010 was LKR 28 billion enabling the highest single borrower exposure up to 

LKR 10 billion. These are key aspects to note about the Bank. Among other significant 

features are that by 31 December 2010, BOC held 22% market share of domestic deposits, 

18% of advances. 

Bank continues to maintain its leadership position in the area of foreign currency remittances 

having a market share of over 43% in the year 2010.To facilitate customers, a web based 

electronic fund transfer system named “ BOC E-cash” was introduced. The Bank also 

introduced “X Press Money”, a network of speedier, low cost money transfer facility in Middle 

East. 

Bank’s procedures and protocols are driven through good corporate governance and 

transparency by complying with all regulatory requirements and best practices in the industry. 

It is committed to follow good corporate citizenship by actively involving in Corporate Social 

Responsibility activities by providing specific budgetary allocation for vital and justifiable social 

welfare projects and utilizing such expenses for the intended purpose. 

Since the early days of the 1940’s, the Bank has played a dominant and robust role in 

national development and continues to do so encompassing the entire country. Such 

development work is not only reflected in a branch network that criss-crosses the whole 

country, but also connect major sectors of the economy to provide life changing banking 

services. Such services take various forms – from direct lending to be it farmers, industrialists, 

large corporations or other government owned businesses or indirectly by placing the balance 

sheet of the bank at risk to facilitate trade across national and international borders. For the 

most part such services are priced on commercial terms taking into consideration costs and 

expenses normally incurred in the course of engaging in such activities. On a continuous 

basis, however, the Bank also undertakes activities that are not so commercially priced but 

provided at lower rates in order to develop selected areas of the country, its people and their 

businesses. The returns from such activities, at times distant and remote are not at all 

intangible. The history of the bank is full of examples where such development activity has 

generated beneficial results. 


15

Board of 

Directors 

Operational Structure of the Bank 

Through the Audit 

Committee 

General 

Manager 

DGM Corporate & 

Offshore Banking 

Additional General Manager 

International & Treasury 

DGM Retail Banking 

DGM Sales & Channel 

Management 


Product & Development 

DGM Investment Banking 


Recovery 

Chief Finance Officer 

DGM Finance & Planning 

Chief Risk Officer 

Chief Internal Auditor 

Head of Information 

DGM Human Resources 

Chief Legal Officer 

DGM Support Services 

Head of Marketing 

Head of Research 


16 

Corporate Banking 

Offshore Banking 

Treasury Operations 

International Banking 

Overseas Branch Operations 

Retail Banking 

Personal Banking 

Leasing Operations 

Development Banking 

Islamic Banking/Card Centre 

Product Development 

Investment Banking 

NPA Monitoring & Recovery 

Strategic Planning & Financial 

Strategy, Supervision of Subsidiaries 

Financial Controls and Reporting, 

Performance Management 

Risk Management & Compliance 

Internal Audit 

Information Technology 

HR Operations 

Training 

Legal 

Procurement, Premises, 

Core Banking System Operations, 

Security & Transport 

Marketing 

Research & Development

Significant milestones in the life of the Bank 

1939 - Bank of Ceylon established as the nation’s first modern, locally-owned bank. Ceremonially 

opened on 1 August by Governor, Sir Andrew Caldecott, at the present-day premises of the 

City Office. 

1941 - Operations commence in Kandy with opening of a branch office. Other branches opened 

subsequently in other large outstation towns: Galle, Jaffna and Trincomalee. 

1946 - Foreign Department established. Operates from offices at the Grand Oriental Hotel (GOH) 

Building, Colombo Fort. 

1949 - First overseas branch opens in London shortly after Independence; it is the thirteenth bank 

branch to be opened. 

1953 - C Loganathan becomes first Sri Lankan General Manager. 

1954 - Central Office moves from City Office to premises at GOH Building. 

1959 - Authorised capital enhanced to Rs. 50 million by Act of Parliament. 

1961 - Nationalisation. The Government of Ceylon becomes sole owner of Bank of Ceylon. 

Kachcheri branch network set up in alignment with the Government’s District Administration 

System. 

1973 - Agriculture Service Centre concept implemented. Operations commence at over 350 

Agricultural Service Centre Branches. Comprehensive Rural Credit Scheme implemented. 

1978 - Non-Residents Foreign Currency (NRFC) deposit scheme introduced. 

1979 - Off-shore banking operations commenced with the establishment of the Foreign Currency 

Banking Unit. 

1980 - Computer Division established; automation of business operations commences. 

1981 - Branch opened in Malé, Republic of Maldives. 

1985 - Head Office moves to 32-storey BOC Tower in Colombo. 

1988 - Installation of the first BOC ATMs ushers in the electronic banking era. 

1989 - Ceybank Visa credit card introduced in collaboration with Visa International. 

1995 - Overseas branch network augmented with offices in Madras and Karachi. 

1996 - Joint venture with Nepal Bank establishes Nepal Bank of Ceylon Limited. 

1998 - MoU with Government results in greater management autonomy and target- based 

performance. 

2000 - Authorised capital further enhanced to Rs. 50 billion by Act of Parliament. 

2004 - Real estate subsidiary Mireka Capital Land (Private) Limited formed to invest in Havelock 

City, the largest single Condominium development in Sri Lanka. 

2005 - Balance Sheet footings top Rs. 300 billion, the largest asset base of any Sri Lankan bank. 

Wide range of relief, rehabilitation and reconstruction activities undertaken and financed in the 

aftermath of the December 2004 tsunami. 


17

2006 - Wins IBM/FISERV prize for the fastest deployment of an online core banking system in Asia 

Pacific region. 

2007 - Raises US$ 210 million, the largest internationally syndicated debt by any Sri Lankan issuer; 

appointed Co-Manager of historic US$ 500 million debut bond issued by the Government of 

Sri Lanka; commences Village Development 

Programme focused on engaging rural communities. 

2008 - Raises Rs. 4.2 billion via a listed subordinated rupee debenture of 5 years; raises US$ 21.6 

million via a private placement of a 5-year subordinated dollar debenture. 

2009 - BoC completed fully integrated online branch network by bringing in Kilinochchi, Mankulam 

and Mullaitivu branches into the network, the operations of which were disrupted at the time 

of ending the war. 

- BoC celebrated its 70th Anniversary. Bank launched an Islamic Banking Unit, which 

operates through Island-wide network 

2010 - BoC diversified its operations in the United Kingdom by upgrading its London branch to a 

Subsidiary of BoC that will be used as a platform for global banking and to attract more 

foreign investment to the country. 

- Bank has set up a specialised investment banking unit aiming to diversify its portfolio in noncore 

banking. 

- Bank successfully raised Rs. 5 billion in the second public issue of unsecured, subordinated 

redeemable five-year debentures. 

- BoC acted as the Bankers to the issue, Managers, sponsors and registrars for the Urban 

Development Authority‘s Rs.10 Billion debenture issue. 

Awards Received By Bank of Ceylon 

Award for Excellence in Trade Finance Vision Awards 2009 

Best Sri Lankan Trade Bank Organized by League of 

for 2010 in a Competition American Communications 

Professionals (LACP). Organized by Trade Finance Professional (LACP) 

Report (Commercial Banks, the Globle Magazine for exporta Overall Silver Award for 

And commodity finance Annual Report. 

And the following awards 

- Best Presented Accounts Awards Competition 2009 Organised by South Asian Federation of 

Accountants (SAFA), Award: Gold Public Sector Entities - Co-Winner 

- Annual Report Awards Competition 2010, Organised by The Institute of Chartered Accountants of 

Sri Lanka Award: Certificate of Compliance 

- ARC Awards for the Annual Report 2009 International ARC Awards 2010,organised by Mercomm, 

Inc. USA 

- Interior Design in the Banks: National Commercial category – Gold 

- Illustration : National Commercial category - Silver 

- Financial Data – Honours- Photography –Honours 


18

Business Highlights 

Highest ranked Sri Lankan bank in the Bankers Almanac 

Bank of Ceylon’s outlook has been revised by Fitch Ratings Lanka Limited to positive from 

stable, and affirmed its National Long- Term Rating at ÁA(lka)’ 

Wider customer base over 9 million accounts 

Leader in treasury operations with over 50% of local foreign exchange market 

Worldwide network reaching over 995 foreign correspondents 

Leader in inward foreign remittances with over 43% market share 

Nation’s first locally-owned bank, expanded its operations with an island-wide network of 926 

service points; 926 connected on-line 

Representing largest off-shore banking operations with the highest market share of assets 

Bank achieved a remarkable breakthrough in trade finance by centralizing its activities for 

customer convenience and recognized as the best Sri Lankan Trade Bank for 2010 for the 

second consecutive year with over 50% market share 

The first State Bank to commence 24 hour service point 

The London branch of the bank was converted as an independent fully-owned Subsidiary, 

operating in United Kingdom 

Single borrower exposure capacity in excess of Rs. 10 billion 

BOC’s new corporate plan branded ‘one 10 TWELVE’(ie. Rs. 1 trillion assets, Rs. 10 billion 

profit before tax by year 2012) reached to Rs. 715 billion assets, Rs. 10 bilion profit before tax 

in the year 2010 

Bank’s deposit mobilization campaigns throughout the country achieved a remarkable deposit 

base of Rs. 524 billion 

Lending to private sector increased by Rs. 62 billion, 34% up 

Increased penetration in branchless banking by introduction of internet banking and mobile 

banking 

Bank successfully raised Rs. 5 billion for the second time by issuing subordinated 5 year 

debentures listed on the Colombo Stock Exchange 

Bank of Ceylon introduced new business lines by adding an investment arm and Islamic 

banking into its banking stream 


19

PERFORMANCE SNAPSHOT 

Total assets vs Total Deposits 


20

Rs. Mn 

12000 

10000 

8000 

6000 

4000 

2000 

0 

Contribution to Government 

2006 2007 2008 2009 2010 

Year 

Tax & Prof it 

( % ) 

6.00% 

5.00% 

4.00% 

3.00% 

2.00% 

1.00% 

0.00% 


21 

Non Performing Assets 

2006 2007 2008 2009 2010 Jun- 

11 

Year 

2006 

2007 

2008 

2009 

2010 

Jun-11

4.2 Principal activities 

The Bank provides a comprehensive range of services covering all sectors of the business 

community as well as the Government. Listed below are the products and services provided. 

Corporate & Offshore Banking Retail Banking Personal Banking 

* Advances * Savings accounts * Current accounts 

* Trade Finance facilities * Current accounts * Local currency savings 

* Deposits * Loans & Advances * Foreign currency deposits 

* Fund Transfers * Trade Finance * Term deposits 

* Bonds & Guarantees * Islamic Banking * Credit/Debit cards 

* Other services * Safe Custody Vault 

International & Treasury Operations Development Banking 

* International Banking * Micro Farming 

* Correspondent Relationship * Micro Enterprises 

* Trade Promotions * Fisheries 

* Pay Office & Travel * Agri Business 

* Inward Remittance * Housing 

* Treasury * Transportation 

* Transactions in Government securities * Small & Medium Enterprises 

* Forex * Consumption 

* Fund management Advice * Education 

Investment Banking 

* Corporate Advisory 

* Debt Issues 

* Private Placements & Advisory 

* Trustee/Custodial Services 

* Structured Products 

* IPOs 

* Wealth/ Assests Management 

Goals for 2011 and beyond 

Outlook 

During 2011-2015, Sri Lanka would bank on local peace dividends and the global economic 

recovery. In the immediate to medium term, the tourism, agriculture and fisheries sectors are 

expected to expedite growth with the opening up of approximately 2/3 of the country’s coastal belt 

and almost ¼ increase in the landmass for economic activity previously unutilised due to the war. 

In the medium term, reconstruction of damaged infrastructure in the north and the east and 

expedited infrastructure in the rest of the country will provide impetus for growth. 

Country’s literate, trainable labour force and the liberalized Information Technology (IT) 

environment would also encourage new ventures in communication and information technology. 

Improved business confidence should continue to promote both local and foreign investments in its 

path to become the Wonder of Asia in line with the government’s vision. 

Committed to the Development of the North & the East 

As has already been reported, the war left two thirds of Sri Lanka’s coastal belt in the north and the 

East under-developed and largely untapped in potential and resources.The BOC is of the view that 

future growth in this context will significantly be domestic –based and the Northern and the Eastern 

Provinces will be at the centre of development, especially in the areas of tourism, agriculture, dairy, 

animal, husbandry and infrastructure development 


22

In such a scenario and in our desire to support the Government’s mandate of bringing development 

to all areas of the country. We believe that BOC has a significant role to play in these endeavours, 

through a commitment to unearth and resuscitate dormant economic power in these regions. 

Objective -Transform BOC to Complete financial Solution House 

Future Strategies 

- Revenue Diversification 

- New Markets/ New Products 

- New skill set/skill migration 

- Business realignment 

Assumptions 

- Sustainability of Domestic Peace 

- Our expectation that GDP will grow positively focusing on agriculture, fisheries, tourism, 

infrastructure and service industry 

- Political stability of the government and policy stability 

- Investor friendly Interest rate regime 

- Relatively stable rupee 

- Single digit inflation 

- Majority of the Banking sector growth is sourced from Domestic economy 

Risk 

- Sustainability of low interest rate regime 

- Changes to the government policy Directions 

- Unexpected external shocks 

- Changes in Domestic inflation 

- Risk of political instability 

- Bank inability to Source/ retain/develop future skills 

- Systemic threat on asset quality 

- Natural Disasters 

Bank inability to cope up with new market/ new product 

4.3 Stated capital 

a) The detailed breakdown of the share capital of BOC is given below. 

Authorized Capital LKR’000 

50,000,000 ordinary shares of LKR 1000 each 50,000,000 

Issued and fully paid 5,000,000 

The entire (100%) issued capital of BOC is held by the Secretary to the Treasury on behalf of the 

Government of Sri Lanka. 

b) Particulars of Loans, other Borrowings, Liabilities and indebtedness 

LKR ‘000 

(i) Long term borrowings as at 31 August 2011 

Debenture Issued (Note 1 below) 38,705,862 

Term Borrowings from banks abroad 43,743,353 

Term Borrowings from banks & other institutions in SL 

Refinance borrowings 5,908,228 

(ii) Short term Borrowings as at 31 August 2011 

Securities sold under re-purchase agreements 59,247,718 


23

Note 01- Details of Debenturs 

I. Unlisted Rupee debentures issued by BOC as at 31 st August 2011. 

Investor Amount Invested 

II. Unlisted USD Debenture as at 31 st August 2011 

Instrument Amount Rate of Interest 

Thirty Thousand (30,000) USD 21.375 Type “ A “ 

Unsecured Redeemable Million Floating interest rate equivalent to the 

Subordinated Five year Rs. six (06) month London Inter Bank Offered 

Debentures of USD one Rate (LIBOR) plus three per centum (3%) 

thousand (USD 1000) each p.a. re-set bi-annually. 

Rupees Value as at 31 August 2011 

Rs. 2,372,354, 325 

Redeemable 

Date 

USD 0.240 Type “ B “ 

Million Fixed Interest rate of five decimal five per 

Centum (5.5%) p.a. 


24 

Interest 

Rate (%) 

Payable 

BoC Pension Trust Fund 1,500,000,000 10.01.2012 10.39 Annually 


BoC Provident Fund 500,000,000 01.04.2013 11.02 Annually 


National Savings Bank 1,000,000,000 27.10.2011 12.11 Semi Annually 

Sri Lanka Insurance Co. 250,000,000 31.12.2011 10.15 Semi Annually 

BoC Provident Fund 1,000,000,000 01.07.2015 13.20 Annually 



BoC W/W & OP Fund 1,750,000,000 03.08.2015 11.50 Annually 


Employees' Trust Fund 300,000,000 15.08.2013 14.31 Annually 




BoC W/W & OP Fund 500,000,000 01.11.2012 11.48 Annually 

BoC W/W & OP Fund 1,200,000,000 17.11.2011 11.36 Annually 

Total 26,928,812,500

III. Listed Rupee Debentures as at 31 st August 2011 

Rupee Debentures issued by BOC 2008 / 2013 

Instrument No of Amount Rate of Interest 

Investors 

Unsecured Subordinated 516 345,190,000 Fixed rate of Nineteen per cent 

Redeemable Five (05) year (19%) per annum on the Principal 

Debentures of LKR 100 each sum payable annually at the 

Expiry of every One (01) year 

Period from the date of allotment 

Of the debenture 

Unsecured Subordinated 87 3,699,390,000 Floating rate equivalent to 

Redeemable Five (05) year Seventy-Five basis points 

Debentures of LKR 100 each (0.75%) above the Weighted 

Average Six 06) Months 

Treasury Bill interest rate 

(Before tax) 

Unsecured Subordinated 407 360,114,977 Redeemable at LKR 225 for each 

Redeemable Five (05) Year bearing 17.61% p.a. yield to 

Zero Coupon Debentures maturity on the face value. 

------------------ 

4,404,694,977 

=========== 

Rupee Debentures issued by BOC 2010 / 2015 as at 31 st August 2011 

Instrument No of Amount Rate of Interest 

Investors 

Unsecured Subordinated 116 1,074,670,000 fixed rate of eleven 

Redeemable Five (05) year per cent (11%) per 

Debentures of LKR 100 each annum on the Principal sum 

Payable annually 

At the expiry of every 

One (01) year period 

From the date of 

Allotment of the 

Debenture 

Unsecured Subordinated 

Redeemable five (05) year 

Debentures of LKR 100 each 57 3,925,330,000 floating rate equivalent 

To Seventy Five 

Basis points (0.75%) 

Above the weighted 

Average six (06) 

Months Treasury Bill Interest rate 

5,000,000,000 

Grand Total ( i + ii + iii) 38,705,862,000 


25

(iii) Contingencies and Commitments 

Guarantees and Other Material Contingent Liabilities as at 31 August 2011 

In the normal course of business, the Bank makes various commitments and incurs contingent 

liabilities with legal recourse to its customers. 

These commitments are quantified below. 

LKR ‘000 

Acceptance and documentary credit 209,111,281 

Bills For collection 2,924,825 

Guarantees 58,778,645 

Forward Exchange Contract 54,036,689 

Other Commitments 89,313 

Rs.324,940,753 

Mortgages and Charges on the Assets of BOC 

The following assets have been pledged by BOC as security as at 31 August 2011 

Assets Value LKR ‘000 

Treasury Bills 22,102,583 

Treasury Bonds 35,578,387 

c) Convertible Debt Securities 

The Bank does not have any convertible debt securities in issue. 

4.4 Patents, Brands & Trade Marks 

Products and Services 

Deposits 

Local Currency Deposit Accounts 

Normal Savings - General purpose savings account for anyone above 18 years of age. 

Ran Kekulu - Higher interest, scholarships for grade 5 scholarship winners, free insurance 

policies for both, the child and account holder and many more benefits. 

14+ Teen Savings - Unique savings scheme ideal for teenagers which could be operated by 

themselves, free VISA Electron Card. 

18+ Youth Savings - Life insurance cover to a maximum of Rs. 500,000 and special insurance cover for 

partial disability and illness, a gold coin for the wedding and Ran Kekulu for first 

born, scholarships for higher education, special 

facilities and many more benefits. 

Sisu Saviya Savings - To encourage savings among school children. 

Kantha Ran Ginum - Higher interest, Free insurance policy cover up to Rs. 500,000 (Life & Accident 

cover), loan facilities at special interest rate, Apsara Visa Credit Card. Senior 

Citizens Savings - Assured monthly payments during the retirement as per agreed 

plan. 

Senior Citizens Fixed Deposits – Monthly interest payment at a higher rate. 


26

Special Purpose Accounts 

Ran Govi Thenpathu - To promote savings habit among farmer community. 

Ranaviru Ran Ginum - Specially designed savings account for staff in the armed forces. 

Samurdhi Savings - To encourage savings among lower income groups. Specially designed with higher 

interest rate. 

Dheevara Thenpathu - Specially designed for the fishing community. 

Prestige+Current Account – Personalised cheque book, free Visa Electron debit card with a withdrawal limit 

of Rs. 100,000,free BoC credit card, Internet banking, SMS banking facilities. 

BoC Infinity - Ability to choose the retirement benefits in multiplies of Rs. 10,000. 

BoC Vishrama - Flexible investment opportunity for cash in hand. 

Maturity Deposits 

7-day Call Deposits 

Savings Certificates - Ideal short-term investment, instant loans and overdrafts, Interest paid upfront, no 

stamp duty/ withholding tax, encashment at any branch. 

Fixed Deposits - General purpose fixed deposits for anyone over 18 years of age. 

Moving Rate Fixed Deposits - Ability to receive different interest rates depending on the period. 

Senior Citizens Fixed Deposits - Deposit with special interest rates for senior citizens. 

BoC Smart Saver - Protection against interest rate fluctuations 

Securities Investment Account (SIA) - To invest in treasury bills/treasury bonds issued by Government of 

Sri Lanka/equity capital of companies incorporated in Sri Lanka/units of unit trusts 

in Sri Lanka. 

Flexi Fixed Deposits- BOC FlexiCard brings flexibility to Fixed Deposits, keeping you in control of your 

money. 

Foreign Currency Deposit Accounts 

NRFC Accounts 

NRFC Savings and Fixed Deposits Transactions in 9 currencies, free life insurance cover, 'BoC 

Sarani' housing loan 

and other loan facilities, no commission charges for foreign 

currency inward remittances, e-banking facilities, international and 

local Visa debit/credit cards, tax exemptions for interest earnings. 

Foreign Currency Savings Account for Professional Service Providers 

Foreign Currency Fixed Deposit for Professional Service Providers 

Foreign Currency Current Account for Professional Service Providers 

RFC Accounts 

RFC Savings and Fixed Deposits Transactions in 9 currencies, attractive interest rates, loan 

facilities, credit card and VISA Electron debit card. Tax exemptions 

for interest earnings. 

Ran Kekulu Foreign Currency - Transactions in 9 currencies, bonus interest. 


27

Other Accounts 

Resident Non-National Foreign Currency Savings (RNNFC) 

Export Foreign Currency Accounts (EFC) 

Special Foreign Investment Deposit Accounts (SFIDA)* - Deposit account for Non-Sri Lankans/Non-resident 

investors with high 

interest rates, tax exemptions. 

Senior Foreign Investment Deposit Account (SENIOR FIDA)* - Facilitate investment with a view to obtaining 

Sri Lankan Permanent Resident Visa for Senior Foreign Nationals 

under 'Sri Lanka My Dream Home' Programme. 

BoC personal loan 

BoC housing loan scheme Flexible services, ability to obtain leasing facilities even without 

BoC Leasing Scheme - a guarantor, Special Leasing Scheme with DIMO 

BoC Paymate - Paying utility bills and other services via SMS 

BOC has not registered any patents as at date. The trademark “BOC “ is registered with the Registry of 

Patents, Brands & Trade Marks. As at date BOC owns the following Brands 


28


29

4.5 Key Customers and suppliers 

BOC adheres to prudential requirements set out by the Central Bank of Sri Lanka, by virtue of 

which exposure to any one group of companies, any one company, and any individual borrower is 

regularly monitored. As such BOC is not overly dependent on any customer or any one sector for 

income at any given time. BOC is also not significantly dependent on any single supplier for its 

requirements 

. 

4.6 Research and Development 

BOC has spent a sum of LKR 15.84 million on research and development activities over the last 

two years. 


30

4.7 Subsidiaries and Associate Companies are shown in following group structure 

Ceybank Asset Management 

(Private) Limited 

Southern Development 

Financial Company Limited 

Transnational Lanka Records 

Solutions (Private) Limited 

Mireka Capital Land 


Lanka Securities 


Bank of Ceylon 

Associates Subsidiaries 


31 

Bank of Ceylon (UK) Limited Koladeniya Hydropower 


Property Development PLC 

Hotels Colombo (1963) Limited 

Ceylease Financial Services 

Limited 

BoC Management & Support 

Services (Private) Limited 

MBSL Savings Bank Limited BoC Property Development & 

Management (Private) Limited 

- Total, Direct and indirect holding of BOC 

- Direct holding of BOC/Subsidieries 

BoC Travels (Private) Limited 

Merchant Bank of 

Sri Lanka PLC 

Ceybank Holiday Homes 


Merchant Credit of 

Sri Lanka Limited 

MBSL Insurance 

Company Limited

4.8 Employees 

The permanent staff strength of BOC as at 30 th September 2011 was 8,103 employees. 

Category of Staff No of Employees 

Executive Management 59 

Senior Management 616 

Middle Management 3394 

Clerical & Allied 3350 

Minor 684 

Total 8103 

as at 30 th September 2011 

The following tabulates the employees of the Trade Unions of the Bank 

Name of the Trade Union No of Employees 

Ceylon Bank Employees’ Union (CBEU) 6885 

BOC Staff Officers’ Association 507 

All Ceylon Bank Employees’ Union 166 

Jathika Sevaka Sangamaya (JSS) 176 

Sri Lanka Nidahas \banku S.S. 36 

Total 7770 

BOC has no bilateral or multilateral agreements with the trade unions 

4.9 Take Over Offers 

There were no offers for acquisitions or mergers by third parties in respect of the BOC shares 

during the past two years. BOC has also not made any similar Offers for the shares of third parties 

during the past two years. 

4.10 Tax Concessions 

No special tax concessions are available to BOC as at date. 

4.11 Dividend policy of the bank 

- Government of Sri Lanka is the sole shareholder of the bank. Dividend ratio will be decided based 

on the profitability of the bank on mutual consent. 

Year Dividend paid (Rs,000) 

2010 3,096,410 

2009 1,346,410 

2008 846,410 


32

4.12 Financial Ratio of the Bank 

2010 2009 

Profitability 

Interest margin % 3.14 2.90 

Return on assets ( before tax) % 1.60 0.82 

Return on equity (after tax) % 24.01 12.85 

Investor Information 

Debt equity 158.61 92.12 

Interest cover (times) 2.10 1.35 

Earnings per share (Rs.) 1,273.06 616.80 

Net assets per share(Rs.) 5,626.37 4,979.72 

Net Debt/ EBITDA 4.53 5.04 

Capital Adequacy Ratios 

Tier 1 (%) 10.30 11.22 

Total (Tier1 + Tier2) % 13.73 14.16 

Assets Quality 

Net non performing asset ratio % 1.42 2.79 

(Net of interest in suspense & 

provision) 

Gross non-performing asset ratio % 3.30 5.65 

(net of interest in suspense) 


33

5. THE BOARD OF DIRECTORS 

5.1 The details of the Board of Directors 

Name & Qualifications Business Experience Other Directorships Address Age 

Dr Gamini 

Wickramasinghe 

(Chairman) 

Doctorate in Business 

Administration (DBA) from 

Manchester Metropolitan 

University, UK 

Master’s Degree in Systems 

Analysis from the University 

of Aston, Birmingham, UK 

Fellow of the Chartered 

Management Institute 

(FCMI) UK. 

Fellow of the British 

Computer Society (FBCS) 

Mr. S. R. Attygalle 

( Ex officio Director ) 

Bachelor of Science (B.Sc) 

Degree in Mathematics from 

the University of Colombo, 

Sri Lanka 

Master’s Degree in 

Economics from Warwick 

University, UK 

Appointed to the Board 

of the Bank of Ceylon as 

the Chairman in may 

2007 and reappointed in 

May 2010 

He was the Chairman of 

the Securities and 

Exchange Commission 

of Sri Lanka from 2006 

to 2009 and the 

Insurance Board of Sri 

Lanka from 2006 to 2008 


of Bank of Ceylon in 

June 2010 

He was a Senior 

Economist of the Central 

Bank of Sri Lanka for a 

number of years and has 

also served as a Director 

and Acting Chairman of 

National Savings Bank 

and a Director of Shell 

Gas Lanka Limited 

Founder of informatics 

Group of Companies. 


34 

Chairman of 

Bank of Ceylon (UK) Limited 




Koladeniya Hydropower 

(Private) Limited. 

Director of 



Lanka Hospitals Corporation 

PLC. 

Director General of 

Department of Public 

Enterprises of the Ministry of 

Finance & Planning. 

Director of 

Sri Lanka Ports Authority 

and the Board of Investment 

of Sri Lanka 

No 410/89, 

Bauddaloka 

Mawatha, 

Colombo 07. 

No. 23, 

Madapatha, 

Piliyandala 

61 

49

Mr Raju Sivaraman 

(Director) 

Chartered Architect 

Master Degree in 

Architecture 

(MSc-Arch) 

Fellow Member of the Sri 

Lanka Institute of Architects 

(F. I. A) 

Ms. Nalini Abeywardene 

( Director ) 

Attorney – at - Law 

Mr. Chandrasiri de Silva 

( Director ) 

Attorney – at- Law 

Master’s Degree in 

International Trade Law from 

the University of Wales, UK 

First appointed to the 

Board of Bank of Ceylon 

in January 2006 and was 

re-appointed in June 

2007 and May 2010 

He served as a Director 

of Merchant Bank of Sri 

Lanka PLC, Mireka 

Capital Land (Private) 

Limited and Property 

Development PLC. 

He served as a Member 

of the National Police 

Commission from 2006 

to 2009 and as a Council 

Member and Treasurer 

of the Sri Lanka Institute 

of Architects over period 

of six years. 


of Bank of Ceylon in May 

2010 

She was a 

Commissioner of the 

Human Rights 

Commission of Sri Lanka 

from 2006 to 2009 


of Bank of Ceylon in May 

2010 

He was a former Director 

of People’s Bank, 

People’s Merchant Bank 

PLC and People’s 

Insurance Company 

Limited and also a 

Former Chairman of 

People’s Travels Limited 


35 

Associate Consultant of 

Plan 3 Architects in India. 

Managing Director of 

Arch- -Traid Consultants 

(Pvt) Ltd, an architectural 

consultancy firm since 1980. 

Chairman of 

Ceylease Financial Services 


Director of 

Merchant Credit of Sri Lanka 

Limited and Milco (Private) 


Member of the 

Board of Management of the 

Galle Heritage Foundation 

of the Ministry of National 

Heritage and Cultural Affairs 

Director of 

Hotels Colombo (1963) 


Mussendapotta Estates 


BOC Travels (Private) 


Chairman of 

BOC Travels (Private) 


Director of 



No.9 A, 

Amarasekara 

Mawatha, 

Colombo 05. 

No. 03, 

Church Cross 

Street, fort, 

Galle 

No. 130 B, 

Baddegane 

Rd, Kotte 

62 

61 

59

Mr. K. L. Hewage 

( Director ) 

Bachelor of Science (B.Sc) 

Degree in Bio Science from 

the University of Kelaniya, 


Master’s Degree in Science 

(M.Sc) in Agricultural 

Extension from the 

University of Reading, UK 

Mr V Kanagasabapathy 

Alternate Director 

Chartered Accountant 

Master’s Degree in Public 

Administration from Harvard 

University, USA 

Fellow Member of the 

Institute Chartered 

Accountants of Sri Lanka 

Appointed as a Director 

to the Board of Bank of 

Ceylon in June 2010 

Served as the Chairman 

of People’s Merchant 

Bank PLC, Janatha 

Fertilizer Enterprises 

Limited, State 

Plantations Corporation, 

State Printing 

Corporation and 

Provincial Road 

Development Authority 

(Western Province) 

And also served as a 

Member of the Board of 

Directors of People’s 

Bank, Janatha Estates 

Development Board and 

as the General Manager 

of Sri Lanka Institute of 

Co- operative 

Management 

Appointed as Alternate 

Director to Mr. S. R. 

Attygalle, 

the Ex officio Director 

from July 2010. Serves 

as Non-Executive 

Alternate Director to the 

Ex officio Director on the 

Board. 

He also served as a 

Director of People’s 

Bank, State Mortgage & 

Investment Bank and 

Merchant credit of Sri 

Lanka Limited. 

He is the senior finance 

consultant of acadamy of 

financial studies, Ministr 

of finance and planning 

Chairman of 

Ceybank Asset 

Management (Private) 



36 

Member of 

the Governing Council of the 

University of Visual and 

Performing Arts 

Director of 

the Board of Merchant Bank 

of Sri Lanka PLC 

Lanka Hydraulic Institute 


Hotel Developers Lanka 

PLC 

De La Rue Lanka Currency 

Security Print (Private) 


Chairman of 

Distance Learning Centre 

Council member of 

Insititute of Chartered 

Accountants of Sri Lanka 

Council member of the 

Insititute of public finance 

and development 

accoutancy 

Member of National Salaries 

and Cadres commission 

No.11, 

Dhammanan 

da Mawatha, 

Walana, 

Panadura 

No. 79/3, 

W A de Silva 

Mawatha, 

Colombo 06. 

66 

65

No Director of BOC or a person nominated to become a director is or was: 

a) Involved in a petition under any bankruptcy laws filed against such person or any partnership in 

which he was a partner or any corporation of which he was an executive officer; 

b) Involved in a conviction for fraud, misappropriation or breach of trust or any other similar offence 

which the CSE consider as a disqualification; or 

c) The subject of any order, judgement or ruling of any court of competent jurisdiction temporarily 

enjoining him from acting as an investment advisor, dealer in securities, director or employee of a 

financial institution and engaging in any type of business practice or activity. 

5.2 Directors’ shareholding 

BOC is a 100% state owned commercial bank. Hence no directors are holding any shares of the 

Bank. 

5.3 Directors’ Interest 

The Directors of the BOC have no interest in any assets acquired, disposed or leased by the BOC 

during the past two years and do not propose to acquire, dispose or lease any assets during the 

two years succeeding the Debenture Issue. 

Directors’ interests in contracts with the Bank both direct and indirect are disclosed under Note 47.5 

of the Financial Statements. 

Arch-Triad Consultants (Private) Limited has been appointed in December 2006 as the Consultant 

Architect for construction of Branch Office and Managers’ quarters at Madurankuliya and Mr 

Sivaraman had declared his interest on the said company at the Board meeting of BOC when this 

decision was taken. 

5.4 Directors’ Remuneration 

The allowances/fees payable to the Board of Directors are made in terms of the provisions in the 

Public Enterprises Circular No PED 04 dated 01 January 2003 and PF/PE/21 dated 24 May 2002 

issued by the Department of Public Enterprises of the General Treasury. 

The aggregate emoluments paid to the Directors during the financial year ended 31 December 

2010 was LKR 1.5 million. Estimate for the year 2011 is Rs. 2.6 million. 


37

6. EXTRACTS FROM THE CORPORATE GOVERNANCE PRACTICES 

Bank of Ceylon pursues a strategy of being in line with best practices in respect of 

Corporate Governance and it is a vital element in enhancing the Bank’s financial growth, 

competitiveness and implementing its sustainability framework. The Bank believes that complying 

with laws, regulations, policies, processes and procedures affecting the way that Bank of Ceylon is 

controlled and managed is the critical success factor of sound control environment, which will 

improve operational efficiency and enhance the brand image 

A sound system of governance is also fundamental in attracting and maintaining public confidence 

in the Bank. 

Pivotal and dominant role the Bank plays in the Sri Lanka economy carrying substantial influence 

and leadership over many matters of policy and practice are the many reasons for the importance 

of good governance and for it to be a guiding framework for the future. 

Conscious of the many roles of the Government in the life of the Bank as owner, customer, 

regulator and auditor, the Nomination and Corporate Governance Committee, which is a 

subcommittee of the Board primarily focuses on the implementation of the applicable governance 

rules and best practices and continuously monitors the progress 

The Bank is bound by the Banking Act Direction No. 11 of 2007 on Corporate Governance for 

Licensed Commercial Banks issued by the Central Bank of Sri Lanka. The Bank has taken steps to 

the best of its ability to comply with the said Direction to the extent that they are not inconsistent 

with the Bank of Ceylon Ordinance No. 53 of 1938 and its amendments, the statute governing the 

Bank, as provided for in the said Direction. 

The Bank also follows the Code of Best Practice on Corporate Governance issued jointly by The 

Securities and Exchange Commission of Sri Lanka and The Institute of Chartered Accountants of 

Sri Lanka, which is not mandatory. Since the Bank is complying with the Directions laid down in the 

aforesaid 

Banking Act Direction No. 11 of 2007, the Colombo Stock Exchange exempted the Bank from 

complying with its requirements stipulated in Section 7.10 under the Continuing Listing 

Requirements on Corporate Governance 

The governance in the Bank covers many stakeholders, the relationships between them and the 

strategic vision of the Bank. The stakeholders comprise the single shareholder, depositors, 

customers, the Board of Directors, management, employees, international banks, suppliers, 

regulators, investors (in debentures issued by the Bank) and society at large. All parties mentioned 

have either a direct or an indirect interest in Corporate Governance as it helps in the effective 

performance of the Bank. The Bank has adopted a Communication Policy covering all its 

stakeholders 

The Board is responsible to stakeholders for creating and delivering sustainable value through the 

management of the Bank’s businesses. The Board is the policy-making body for all matters of such 

importance as to be of significance to the Bank as a whole because of their strategic, financial or 

reputation implications or consequences. The governance by the Board also includes continuous 

review of internal structures to ensure that there are clear lines of accountability for management 

throughout the Bank. The Board also oversees the risk management and remuneration system of 

the Bank. 


38

Principles 

In conformance with the principles of Corporate Governance and the above said Banking Act 

Direction, the positions of the Chairman and the Chief Executive Officer/General Manager have 

been segregated with a clear division of duties and responsibilities of the latter, incorporated in the 

Board Charter adopted. 

The overall governance of the Board is the responsibility of the Chairman, while the General 

Manager is primarily responsible for achievement of Board approved objectives, directions, 

corporate values and leading the executive team in the day-to-day management of the Bank and its 

business 

The Board approves the organization’s strategic aims, and ensures that the necessary financial, 

technical and human resources are in place for the Bank to achieve its objectives. It reviews 

management performance against set goals and targets on a continuous basis. 

The Board is committed to following very high ethical standards. This enables the Board to set 

values and standards for the Bank and its staff on par with best practices, while creating trust and 

transparency and ensuring that its obligations to all its stakeholders are understood and met 

In its search for continuous improvement in good governance, the Bank embraces best practices in 

Corporate Governance on its own. It follows an incremental approach in embedding governance 

into its value addition process and is making conscious efforts to continually improve the 

governance framework and the processes beyond the applicable rules and regulations 

As one such measure, in the year 2010, Bank of Ceylon formulated a Subsidiaries Management 

Charter, which was introduced to all the Subsidiaries and Associates of the Bank as a guideline for 

the Bank’s representatives on those Boards. This Charter, through the guidelines incorporated in it, 

strengthens the Bank of Ceylon’s oversight over its Subsidiaries through the Directors appointed to 

them while facilitating the Subsidiaries to fall in line with the Bank of Ceylon’s governance structure 

The disclosures below demonstrate the Bank’s adherence to disclosure requirements of the 

aforesaid Banking Act Direction No. 11 of 2007, and subsequent amendments thereto and the level 

of conformance to the Code of Best Practice on Corporate Governance, issued jointly by The 

Securities and Exchange Commission of Sri Lanka and The Institute of Chartered Accountants of 

Sri Lanka in 2008. 

Aforesaid Direction No. 11 of 2007 consists of Direction 2 and 3. Direction 2 consists of principles 

explaining the rationale for mandatory rules set out in Direction 3. The table starting from page 57 

gives the degree of compliance with Direction 3. Table starting from page 77 gives the status of 

compliance with the aforesaid joint code 

Level of Compliance with Direction No. 11 of 2007 on Corporate Governance for Licensed 

Commercial Banks issued by the Central Bank of Sri Lanka. 

3 (1) the Responsibilities of the Board 

3 (1) (i) The Board shall strengthen the safety and soundness of the Bank by ensuring the 

implementation of the following: 

a) Approve and oversee the Bank’s strategic objectives and corporate values and ensure that these 

are communicated throughout the Bank; 

(b) Approve the overall business strategy of the bank, including the overall risk policy and risk 

management procedures and mechanisms with measurable goals, for at least the next three 

years; 


39

c) Identify the principal risks and ensure implementation of appropriate systems to manage the risks 

prudently; 

(d) Approve implementation of a policy of communication with all stakeholders, including depositors, 

creditors, shareholders and borrowers; 

(e) Review the adequacy and the integrity of the Bank’s internal control systems and management 

information systems; 

(f) Identify and designate Key Management Personnel, as defined in the International Accounting 

Standards, who are in a position to: 

(i) significantly influence policy; 

(ii) direct activities; and 

(iii) exercise control over business activities, operations and risk management; 

(g) Define the areas of authority and key responsibilities for the Board Directors themselves and for 

the Key Management Personnel; 

(h) Ensure that there is appropriate oversight of the affairs of the Bank by Key Management Personnel, 

that is consistent with Board policy; 

(i) Periodically assess the effectiveness of the Board Directors’ own governance practices, including: 

(i) The selection, nomination and election of Directors and Key Management Personnel. 

(ii) The management of conflicts of interests; and 

(iii) The determination of weaknesses and implementation of changes where necessary 

(j) Ensure that the Bank has an appropriate succession plan for Key Management Personnel; 

(k) Meet regularly, on a needs basis, with the Key Management Personnel to review policies, establish 

communication lines and monitor progress towards corporate objectives; 

(l) Understand the regulatory environment and ensure that the Bank maintains an effective relationship with 

regulators; 

(m) Exercise due diligence in the hiring and oversight of External Auditors 

3 (1) (ii) The Board shall appoint the Chairman and the Chief Executive Officer and define and approve the 

functions and responsibilities of the Chairman and the Chief Executive Officer in line with Direction 3 (5) 

of these Directions. 

3 (1) (iii) The Board shall meet regularly and Board meetings shall be held at least twelve times a year at 

approximately monthly intervals. Such regular Board meetings shall normally involve active participation 

in person of a majority of Directors entitled to be present. Obtaining the Board’s consent through the 

circulation of written resolutions/papers shall be avoided as far as possible. 

3 (1) (iv) The Board shall ensure that arrangements are in place to enable all Directors to include matters 

and proposals in the agenda for regular Board meetings where such matters and proposals relate to the 

promotion of business and the management of risks of the Bank. 

3 (1) (v) The Board procedures shall ensure that notice of at least 7 days is given of a regular Board 

meeting to provide all Directors an opportunity to attend. For all other Board meetings, reasonable 

notice may be given. 

3 (1) (vi) The Board procedures shall ensure that a Director, who has not attended at least two-thirds of the 

meetings in the period of 12 months immediately preceding or has not attended the immediately 

preceding three consecutive meetings held, shall cease to be a Director. Participation at the Directors’ 

meetings through an alternate Director shall, however, be acceptable as attendance. 

3 (1) (vii) The Board shall appoint a Company Secretary who satisfies the provisions of Section 43 of the 

Banking Act No. 30 of 1988, whose primary responsibilities shall be to handle the Secretariat Services 

to the Board and shareholder meetings and to carry out other functions specified in the statutes and 

other regulations 

3 (1) (viii) All Directors shall have access to advice and services of the Company Secretary with a view to 


40

ensuring that Board procedures and all applicable rules and regulations are followed. 

3 (1) (ix) The Company Secretary shall maintain the minutes of Board meetings and such minutes shall be 

open for inspection at any reasonable time, on reasonable notice by any Director. 

3 (1) (x) Minutes of Board meetings shall be recorded in sufficient detail so that it is possible to gather from 

the minutes, as to whether the Board acted with due care and prudence in performing its duties. The 

minutes shall also serve as a reference for regulatory and supervisory authorities to assess the depth of 

deliberations at the Board meetings. Therefore, the minutes of a Board meeting shall clearly contain or 

refer to the following 

(a) a summary of data and information used by the Board in its deliberations 

(b) The matters considered by the Board 

(c) The fact-finding discussions and the issues of contention or dissent which may illustrate whether the 

Board was carrying out its duties with due care and prudence; 

(d) The testimonies and confirmations of relevant executives which indicate compliance with the 

Board’s strategies and policies and adherence to relevant laws and regulations; 

(e) the Board’s knowledge and understanding of the risks to which the Bank is exposed and an 

overview of the risk management measures adopted; and 

(f) the decisions and Board resolutions. 

3 (1) (xi) There shall be a procedure agreed by the Board to enable Directors, upon reasonable request, to 

seek independent professional advice in appropriate circumstances, at the Bank’s expense. The Board 

shall resolve to provide separate independent professional advice to Directors to assist the relevant 

Director or Directors to discharge his/her/their duties to the Bank. 

3 (1) (xii) Directors shall avoid conflicts of interests, or the appearance of conflicts of interests, in their 

activities with, and commitments to, other organizations or related parties. If a director has a conflict of 

interest in a matter to be considered by the Board, which the Board has determined to be material, the 

matter should be dealt with at a Board meeting, where Independent Non-Executive Directors [refer to 

Direction 3 (2) (iv) of these Directions] who have no material interest in the transaction, are present. 

Further, 

a Director shall abstain from voting on any Board resolution in relation to which he/she or any of his/her 

close relation or a concern, in which a Director has substantial interest, is interested and he/she shall 

not be counted in the quorum for the relevant agenda item at the Board meeting 

3 (1) (xiii) The Board shall have a formal schedule of matters specifically reserved to it for decision to 

ensure that the direction and control of the Bank is firmly under its authority. 

3 (1) (xiv) The Board shall, if it considers that the Bank is, or is likely to be, unable to meet its obligations or 

is about to become insolvent or is about to suspend payments due to depositors and other creditors, 

forthwith inform the Director of Bank Supervision of the situation of the Bank prior to taking any decision 

or action. 

3(1) (xv) The Board shall ensure that the Bank is capitalized at levels as required by the Monetary Board in 

terms of the capital adequacy ratio and other prudential grounds. 

3 (1) (xvi) The Board shall publish in the Bank’s Annual Report, an annual corporate governance report 

setting out the compliance with Direction 3 of these Directions. 

3 (1) (xvii) The Board shall adopt a scheme of self-assessment to be undertaken by each Director annually, 

and maintain records of such assessments 

3 (2) The Board’s Composition 

3 (2) (i) The number of Directors on the Board shall not be less than 7 and not more than 13. 

3 (2) (ii) (a) The total period of service of a Director other than a Director who holds the position of Chief 

Executive Officer shall not exceed nine years, and such period in office shall be inclusive of the 

total period of service served by such Director up to 01 January 2008. 


41

(b) In this context, the following general exemption shall apply: A Director who has completed nine 

years as at 01 January 2008, or who completes such term at any time prior to 31 December 

2008, may continue for a further maximum period of 3 years commencing 01 January 2009. 

3 (2) (iii) An employee of a bank may be appointed, elected or nominated as a Director of the Bank 

(hereinafter referred to as an ‘Executive Director’) provided that the number of Executive Directors 

shall not exceed one-third of the number of Directors of the Board. In such an event, one of the 

Executive Directors shall be the Chief Executive Officer of the Bank 

3 (2) (iv) The Board shall have at least three Independent Non-Executive Directors or one- third of the total 

number of Directors, whichever is higher. This sub-direction shall be applicable from 01 January 2010 

onwards. 

A Non-Executive Director shall not be considered independent if he/she - 

(a) has direct and indirect shareholdings of more than 1% of the Bank 

(b) currently has or had during the period of two years immediately preceding his/her appointment as 

Director, any business transactions with the Bank as described in Direction 3 (7) hereof, exceeding 

10% of the regulatory capital of the Bank 

(c) has been employed by the Bank during the two year period immediately preceding the appointment 

as Director 

(d) has a close relation who is a Director or Chief Executive Officer or a member of Key Management 

Personnel or a material shareholder of the Bank or another bank. For this purpose, a ‘close relation’ 

shall mean the spouse or a financially dependant child 

(e) represents a specific stakeholder of the Bank; 

(f) is an employee or a Director or a material shareholder in a Company or business organization - 

I. which currently has a transaction with the Bank as defined in Direction 3 (7) of these Directions, 

exceeding 10% of the regulatory capital of the Bank; or 

II. In which any of the other Directors of the Bank are employed or are Directors or are material 

shareholders; or 

III. In which any of the other Directors of the Bank have a transaction as defined in Direction 3 (7) of 

these Directions, exceeding 10% of regulatory capital in the Bank. 

3 (2) (v) In the event an alternate Director is appointed to represent an Independent Director, the person so 

appointed shall also meet the criteria that applies to the Independent Director 

3 (2) (vi) Non-Executive Directors shall be persons with credible track records and/or have necessary skills 

and experience to bring an independent judgment to bear on issues of strategy, performance and 

resources 

3 (2) (vii) A meeting of the Board shall not be duly constituted, although the number of Directors required to 

constitute the quorum at such meeting is present, unless more than one-half of the number of 

Directors present at such meeting are Non-Executive Directors. This Sub-Direction shall be 

applicable from 01 January 2010 onwards. 

3 (2) (viii) The Independent Non-Executive Directors shall be expressly identified as such in all corporate 

communications that disclose the names of Directors of the Bank. The Bank shall disclose the 

composition of the Board, by category of Directors, including the names of the Chairman, 

Executive Directors, Non- Executive Directors and Independent Non-Executive Directors in the 

annual Corporate Governance Report. 

3(2) (ix) There shall be a formal, considered and transparent procedure for the appointment of new 

Directors to the Board. There shall also be procedures in place for the orderly succession of 

appointments to the Board 

3 (2) (x) All Directors appointed to fill a casual vacancy shall be subject to election by shareholders at the 

first general meeting after their appointment. 


42

3 (2) (xi) If a Director resigns or is removed from office, the Board shall: 

(a) Announce the Director’s resignation or removal and the reasons for such removal or resignation 

including but not limited to information relating to the relevant Director’s disagreement with the 

Bank, if any; and 

(b) Issue a statement confirming whether or not there are any matters that need to be brought to the 

attention of shareholders. 

3(2) (xii) A Director or an employee of a bank shall not be appointed, elected or nominated as a Director of 

another bank except where such bank is a Subsidiary Company or an Associate Company of the 

first mentioned bank 

3 (3) Criteria to assess the fitness and propriety of Directors 

3 (3) (i) The age of a person who serves as Director shall not exceed 70 years In this context, the following 

general exemption shall apply: 

A Director who has reached the age of 70 years as at 01 January 2008 or who would reach the age 

of 70 years prior to 31 December 2008 may continue in office for a further maximum period of 3 

years commencing 01 January 2009. 

3 (3) (ii) A person shall not hold office as a Director of more than 20 companies/ entities/institutions 

inclusive of subsidiaries or Associate Companies of the Bank. Of such 20 

companies/entities/institutions, not more than 10 companies shall be those classified as Specified 

Business Entities in terms of the Sri Lanka Accounting and Auditing Standards Act, No. 15 of 1995. 

3 (3) (ii) (a) In this context, the following general exemption shall applyIf any person holds posts in excess of 

the limitation as above, such person shall within a maximum period of three years from 01 

January 2009 comply with the above mentioned limitation and notify the Monetary Board 

accordingly. 

3 (4) Management functions delegated by the Board 

3 (4) (i) The Directors shall carefully study and clearly understand the delegation arrangements in place. 

3 (4) (ii) The Board shall not delegate any matters to a Board Committee, Chief Executive Officer, Executive 

Directors or Key Management Personnel, to an extent that such delegation would significantly 

hinder or reduce the ability of the Board as a whole to discharge its functions. 

3 (4) (iii) The Board shall review the delegation processes in place on a periodic basis to ensure that they 

remain relevant to the needs of the Bank. 

3 (5) The Chairman and Chief Executive Officer 

3 (5) (i) The Directors shall carefully study and clearly understand the delegation arrangements in place 

3 (4) (ii) The Board shall not delegate any matters to a Board Committee, Chief Executive Officer, Executive 

Directors or Key Management Personnel, to an extent that such delegation would significantly 

hinder or reduce the ability of the Board as a whole to discharge its functions. 

3 (4) (iii) The Board shall review the delegation processes in place on a periodic basis to ensure that they 

remain relevant to the needs of the Bank. 

3 (5) The Chairman and Chief Executive Officer 

3 (5) (i) The Roles of Chairman and Chief Executive Officer shall be separate and shall not be performed by 

the same individual 

3 (5) (ii) The Chairman shall be a Non-Executive Director and preferably an independent Director as well. In 

the case where the Chairman is not an Independent Director, the Board shall designate an 

Independent Director as the Senior Director with suitably documented terms of reference to ensure 

a greater independent element. The designation of the Senior Director shall be disclosed in the 

Bank’s Annual Report. 


43

3 (5) (iii) The Board shall disclose in its Corporate Governance Report, which shall be an integral part of its 

Annual Report, the identity of the Chairman and the Chief Executive Officer and the nature of any 

relationship [including] financial, business, family or other material/relevant relationship(s)], if any 

between the Chairman and the Chief Executive Officer and the relationships among members of 

the Board. 

3 (5) (iv) The Chairman shall - (a) provide leadership to the Board; (b) ensure that the Board works 

effectively and discharges its responsibilities; and (c) ensure that all key and appropriate issues are 

discussed by the Board in a timely manner. 

3 (5) (v) The Chairman shall be primarily responsible for drawing up and approving the agenda for each 

Board meeting, taking into account where appropriate, any matters proposed by the other Directors 

for inclusion in the agenda. The Chairman may delegate the drawing up of the agenda to the 

Company Secretary. 

3 (5) (vi) The Chairman shall ensure that all Directors are properly briefed on issues arising at Board 

meetings and also ensure that Directors receive adequate information in a timely manner. 

3 (5) (vii) The Chairman shall encourage all Directors to make a full and active contribution to the Board’s 

affairs and take the lead to ensure that the Board acts in the best interests of the Bank 

3 (5) (viii) The Chairman shall facilitate the effective contribution of Non-Executive Directors in particular 

and ensure constructive relations between Executive and Non-Executive Directors 

3(5) (ix) The Chairman shall not engage in activities involving direct supervision of Key Management 

Personnel or any other executive duties whatsoever 

3 (5) (x) The Chairman shall ensure that appropriate steps are taken to maintain effective communication 

with shareholders and that the views of shareholders are communicated to the Board. 

3 (5) (xi) Chief Executive Officer shall function as the apex executive-in-charge of the day-to-day 

management of the Bank’s operations and business 

3 (6) Board appointed Committees 

(6) (i) Each bank shall have at least four Board Committees as set out in Directions 3 (6) (ii), 3 (6) (iii), 3 

(6) (iv) and 3 (6) (v) of these Directions. Each committee shall report directly to the Board. All committees 

shall appoint a Secretary to arrange the meetings and maintain minutes, records, etc.under the supervision 

of the Chairman of the Committee. The Board shall present a report of the performance on each committee, 

on their duties and roles at the Annual General Meeting. 

3 (6) (ii) The following rules shall apply in relation to the Audit Committee: 

(a) The Chairman of the Committee shall be an Independent Non-Executive Director who 

possesses qualifications and experience in accountancy and/or audit. 

(b) All members of the committee shall be Non-Executive Directors. 

(c) The Committee shall make recommendations on matters in 

connection with: 

i. The appointment of the External Auditor for audit services to be provided in compliance 

with the relevant statutes 

ii. The implementation of the Central Bank guidelines issued to auditors from time to time; 

iii. The application of the relevant accounting standards; and 

iv. The service period, audit fee and any resignation or dismissal of the Auditor; provided that the 

engagement of the audit partner shall not exceed five years, and that the particular audit 

partner is not re-engaged for the audit before the expiry of three years from the date of the 

completion of the previous term 

(d) The Committee shall review and monitor the external auditor’s independence and objectivity and 

the effectiveness of the audit processes in accordance with applicable standards and best 

practices. 


44

(e) The Committee shall develop and implement a policy on the engagement of an External Auditor 

to provide non-audit services that are permitted under the relevant statutes, regulations, 

requirements and guidelines. In doing so, the committee shall ensure that the provision by an 

External Auditor of non-audit services does not impair the External Auditor’s independence or 

objectivity. When assessing the External Auditor’s independence or objectivity in relation to the 

provision of non-audit services,the Committee shall consider – 

I. whether the skills and experience of the audit firm make it a suitable provider of the non-audit services 

II. whether there are safeguards in place to ensure that there is no threat to the objectivity and/or 

independence in the conduct of the audit resulting from the provision of such services by the External 

Auditor; and 

III. Whether the nature of the non-audit services, the related fee levels and the fee levels individually and in 

aggregate relative to the audit firm, pose individually and in aggregate relative to the audit firm, pose 

(f) The Committee shall, before the audit commences, discuss and finalise with the External Auditors the 

nature and scope of the audit, including 

I. An assessment of the Bank’s compliance with the relevant Directions in relation to corporate governance 

and the management’s internal controls over financial reporting; 

ii. The preparation of Financial Statements for external purposes in accordance with relevant accounting 

principles and reporting obligations; and 

iii. The co-ordination between firms where more than one audit firm is involved 

(g) The Committee shall review the financial information of the Bank, in order to monitor the integrity of the 

Financial Statements of the Bank, its Annual Report, accounts and quarterly reports prepared for 

disclosure, and the significant financial reporting judgments contained therein. In reviewing the Bank’s 

Annual Report and accounts and quarterly reports before submission to the Board, the Committee shall 

focus particularly on: 

.i Major judgmental areas; 

ii. Any changes in accounting policies and practices 

iii. Significant adjustments arising from the audit; 

iv. The going concern assumption; and 

v. The Compliance with relevant Accounting Standards and other legal requirements 

(h) The Committee shall discuss issues, problems and reservations arising from the interim and final audits, 

and any matters the Auditor may wish to discuss including those matters that may need to be discussed in 

the absence of key management personnel, if necessary. 

(i) The Committee shall review the External Auditor’s management letter and the management’s response 

thereto. 

(j) The Committee shall take the following steps with regard to the internal audit function of the Bank: 

I. Review the adequacy of the scope, functions and resources of the internal audit department, and satisfy it 

that the department has the necessary authority to carry out its work 

II. Review the internal audit programme and results of the internal audit process and, where necessary, 

ensure that appropriate actions are taken on the recommendations of the internal audit department 

III. Review any appraisal or assessment of the performance of the head and senior staff members of the 

internal audit department 

IV. Recommend any appointment or termination of the head, senior staff members and outsourced service 

providers to the internal audit function 

V. Ensure that the Committee is appraised of resignations of seniorstaff members of the internal audit 

department including the chiefinternal auditor and any outsourced service providers, and to provide 

anopportunity to the resigning senior staff members and outsourced service providers to submit reasons for 

resigning 

VI. Ensure that the internal audit function is independent of the activities it audits and that it is performed 

with impartiality, proficiency and due professional care; 

(k) The Committee shall consider the major findings of internal investigations and management’s responses 

thereto 


45

(l) The Chief Finance Officer, the Chief Internal Auditor and a representative of the External Auditors may 

normally attend meetings. Other Board Members and the Chief Executive Officer may also attend meetings 

upon the invitation of the Committee. However, at least twice a year, the Committee shall meet with the 

External Auditors without the Executive Directors being present. 

(m) The Committee shall have - 

i. Explicit authority to investigate into any matter within its terms of reference; 

ii. The resources which it needs to do so; 

iii. Full access to information; and 

iv. Authority to obtain external professional advice and to invite outsiders with relevant experience to attend, 

if necessary. 

(n) The Committee shall meet regularly, with due notice of issues to be discussed and shall record its 

conclusions in discharging its duties and responsibilities.. 

(o) The Board shall disclose in an informative way, 

i. Details of the activities of the Audit Committee; 

ii. The number of Audit Committee Meetings held in the year; and 

iii. Details of attendance of each individual Director at such meetings. 

(p) The Secretary of the Committee (who may be the Company Secretary or the head of the internal audit 

function) shall record and keep detailed minutes of the Committee Meetings. 

(q) The Committee shall review arrangements by which employees of the Bank may, in confidence, raise 

concerns about possible improprieties in financial reporting, internal control or other matters. 

Accordingly, the Committee shall ensure that proper arrangements are in place for the fair and 

independent investigation of such matters and for appropriate follow- up action and to act as the key 

representative body for overseeing the Bank’s relations with the external auditor. 

3 (6) (iii) The following rules shall apply in relation to the Human Resources an Remuneration Committee: 

(a) The Committee shall determine the remuneration policy (salaries, allowances and other financial 

payments) relating to Directors, Chief Executive Officer (CEO) and Key Management Personnel of 

the Bank. 

(b) The Committee shall set goals and targets for the Directors, CEO and the Key Management 

Personnel. 

(c) The Committee shall evaluate the performance of the CEO and Key Management Personnel against 

the set targets and goals periodically and determine the basis for revising remuneration, benefits 

and other payments of performance-based incentives. 

(d) The CEO shall be present at all meetings of the Committee, except when matters relating to the 

CEO are being discussed. 

3 (6) (iv) The following rules shall apply in relation to the Nomination Committee: 

(a) The Committee shall implement a procedure to select/appoint new Directors, CEO and Key 

Management Personnel. 

(b) The Committee shall consider and recommend (or not recommend) the re-election of current 

Directors, taking into account the performance and contribution made by the Director concerned 

towards the overall discharge of the Board’s responsibilities. 

(c) The Committee shall set the criteria such as qualifications, experience and key attributes required for 

eligibility to be considered for appointment or promotion to the post of CEO and the Key 

Management Positions. 

(d) The Committee shall ensure that Directors, CEO and Key Management Personnel are fit and proper 

persons to hold office as specified in the criteria given in Direction 3(3) and as set out in the 

Statutes. 


46

(e) The Committee shall consider and recommend from time to time, the requirements of additional/new 

expertise and the succession arrangements for retiring Directors and Key Management Personnel. 

(f) The Committee shall be chaired by an Independent Director and preferably be constituted with a 

majority of Independent Directors. The CEO may be present at meetings by invitation. 

3 (6) (v) The following rules shall apply in relation to the Integrated Risk Management Committee: 

(a) The Committee shall consist of at least three Non-Executive Directors, Chief Executive Officer and 

Key Management Personnel supervising broad risk categories, i.e., credit, market, liquidity, 

operational and strategic risks. 

The Committee shall work with Key Management Personnel very closely and make decisions on 

behalf of the Board within the framework of the authority and responsibility assigned to the 

Committee. 

(b) The Committee shall assess all risks, i.e., credit, market, liquidity, operational and strategic risks to 

the Bank on a monthly basis through appropriate risk indicators and management information. In the 

case of Subsidiary Companies and Associate Companies, risk management shall be done, both on a 

bank basis and group basis. 

(c) The Committee shall review the adequacy and effectiveness of all management level committees 

such as the credit committee and the asset-liability committee to address specific risks and to manage 

those risks within quantitative and qualitative risk limits as specified by the committee. 

(d) The Committee shall take prompt corrective action to mitigate the effects of specific risks in the case 

such risks are at levels beyond the prudent levels decided by the Committee on the basis of the 

Bank’s policies and regulatory and supervisory requirements. 

(e) The Committee shall meet at least quarterly to assess all aspects of risk management including 

updated business continuity plans. 

(f) The Committee shall take appropriate actions against the officers responsible for failure to identify 

specific risks and take prompt corrective actions as recommended by the Committee, and/or as 

directed by the Director of Bank Supervision. 

(g) The Committee shall submit a risk assessment report within a week of each meeting to the Board 

seeking the Board’s views, concurrence and/or specific directions. 

(h) The Committee shall establish a compliance function to assess the Bank’s compliance with laws, 

regulations, regulatory guidelines, internal controls and approved policies on all areas of business 

operations. A dedicated compliance officer selected from Key Management Personnel shall carry out 

the compliance function and report to the Committee periodically. 

3 (7) Related Party Transactions 

3 (7) (i) The Board shall take the necessary steps to avoid any conflicts of interest that may arise from any 

transaction of the Bank with any person, and particularly with the following categories of persons 

who shall be considered as ‘related parties’ for the purposes of this Direction: 

(a) Any of the Bank’s Subsidiary Companies; 

(b) Any of the Bank’s Associate Companies; 

(c) Any of the Directors of the Bank; 

(d) Any of the Bank’s Key Management Personnel; 

(e) A close relation of any of the Bank’s Directors or Key Management Personnel; 

(f) A shareholder owning a material interest in the Bank; 

(g) A concern in which any of the Bank’s Directors or a close relation of any of the Bank’s Directors 

or any of its material shareholders has a substantial interest. 

3 (7) (ii) The type of transactions with related parties that shall be covered by this Direction shall include the 

following: 

(a) The grant of any type of accommodation, as defined in the Monetary Board’s Directions on 

maximum amount of accommodation; 


47

(b) The creation of any liabilities of the Bank in the form of deposits, borrowings and investments; 

(c) The provision of any services of a financial or non-financial nature provided to the Bank or 

received from the Bank; 

(d) The creation or maintenance of reporting lines and information flows between the Bank and 

any related parties which may lead to the sharing of potentially proprietary, confidential or 

otherwise sensitive information that may give benefits to such related parties. 

3 (7) (iii) The Board shall ensure that the Bank does not engage in transactions with related parties as 

defined in Direction 3 (7) (i) above, in a manner that would grant such parties ‘more favourable 

treatment’ than that accorded to other constituents of the Bank carrying on the same business. In 

this context, ‘more favourable treatment’ shall mean and include treatment, including the: 

(a) Granting of ‘total net accommodation’ to related parties, exceeding a prudent percentage of the 

Bank’s regulatory capital, as determined by the Board. For purposes of this Sub-Direction: 

I. ‘Accommodation’ shall mean accommodation as defined in the Banking Act Directions, No. 07 

of 2007 on Maximum Amount of Accommodation. 

II. The ‘total net accommodation’ shall be computed by deducting from the total accommodation, 

the cash collateral and investments made by such related parties in the Bank’s share capital 

and debt instruments with a maturity of 5 years or more. 

(b) Charging of a lower rate of interest than the Bank’s best lending rate or paying more than the 

Bank’s deposit rate for a comparable transaction with an unrelated comparable counterparty; 

(c) Providing of preferential treatment, such as favourable terms, covering trade losses and/or 

waiving fees/commissions, that extend beyond the terms granted in the normal course of 

business undertaken with unrelated parties; 

(d) Providing services to or receiving services from a related-party without an evaluation procedure; 

(e) Maintaining reporting lines and information flows that may lead to sharing potentially proprietary, 

confidential or otherwise sensitive information with related parties, except as required for the 

performance of legitimate duties and functions. 

3 (7) (iv) A bank shall not grant any accommodation to any of its Directors or to a close relation of such 

Director unless such accommodation is sanctioned at a meeting of its Board of Directors, with not 

less than two-thirds of the number of Directors other than the Director concerned, voting in favour 

of such accommodation. This accommodation shall be secured by such security as may from time 

to time be determined by the Monetary Board as well. 

3 (7) (v) (a) Where any accommodation has been granted by a bank to a person or a close relation of a 

person or to any concern in which the person has a substantial interest, and such person is 

subsequently appointed as a Director of the Bank, steps shall be taken by the Bank to obtain the 

necessary security as may be approved for that purpose by the Monetary Board, within one year 

from the date of appointment of the person as a Director. 

(b) Where such security is not provided by the period as provided in Direction 3 (7) (v) (a) above, 

the Bank shall take steps to recover any amount due on account of any accommodation, 

together with interest, if any, within the period specified at the time of the grant of 

accommodation or at the expiry of a period of eighteen months from the date of appointment of 

such Director, whichever is earlier. 

(c) Any Director who fails to comply with the above Sub-Directions shall be deemed to have vacated the 

office of Director and the Bank shall disclose such fact to the public. 

(d) This Sub-Direction, however, shall not apply to a Director who at the time of the grant of the 

accommodation was an employee of the Bank and the accommodation was granted under a scheme 

applicable to all employees of such bank. 


48

3 (7) (vi) A bank shall not grant any accommodation or ‘more favourable treatment’ relating to the waiver of 

fees and/or commissions to any employee or a close relation of such employee or to any concern in which 

the employee or close relation has a substantial interest other than on the basis of a scheme applicable to 

the employees of such bank or when secured by security as may be approved by the Monetary Board in 

respect of accommodation granted as per Direction 3 (7) (v) above. 

3 (7) (vii) No accommodation granted by a bank under Direction 3 (7) (v) and 3 (7) (vi) above, nor any part 

of such accommodation, nor any interest due thereon shall be remitted without the prior approval of the 

Monetary Board and any remission without such approval shall be void and of no effect. 

3 (8) Disclosures 

3 (8) (i) The Board shall ensure that - 

(a) Annual Audited Financial Statements and quarterly Financial Statements are prepared and published in 

accordance with the formats prescribed by the supervisory and regulatory authorities and applicable 

Accounting Standards; and that, 

(b) Such statements are published in the newspapers in an abridged form, 

in Sinhala, Tamil and English. 

3 (8) (ii) The Board shall ensure that the following minimum disclosures are made in the Annual Report: 

(a) A statement to the effect that the annual Audited Financial Statements have been prepared in line with 

applicable Accounting Standards and regulatory requirements, inclusive of specific disclosures. 

(b) A report by the Board on the Bank’s internal control mechanism that confirms that the financial reporting 

system has been designed to provide reasonable assurance regarding the reliability of financial reporting, 

and that the preparation of Financial Statements for external purposes has been done in accordance with 

relevant accounting principles and regulatory requirements. 

(c) The External Auditor’s certification on the effectiveness of the internal control mechanism referred to in 

Direction 3 (8) (ii) (b) above, in respect of any statements prepared or published after 31 December 2008. 

(d) Details of Directors, including names, fitness and propriety, transactions with the Bank and the total of 

fees/remuneration paid by the Bank. 

(e) Total net accommodation as defined in 3 (7) (iii) is granted to each category of related parties. The net 

accommodation granted to each category of related parties shall also be disclosed as a percentage of the 

Bank’s regulatory capital. 

(f) The aggregate values of remuneration paid by the Bank to its Key Management Personnel and the 

aggregate values of the transactions of the Bank with its Key Management Personnel, set out by the Broad 

categories such as remuneration paid, accommodation granted and deposits or investments made in the 

Bank. 

(g) The External Auditor’s certification of the compliance with these Directions in the annual Corporate 

Governance reports published after 01 January 2010. 

(h) A report setting out details of the compliance with prudential requirements, regulations, laws and internal 

controls and measures taken to rectify any material non-compliances. 

(i) A statement of the regulatory and supervisory concerns on lapses in the Bank’s risk management, or 

non-compliance with these Directions that have been pointed out by the Director of Bank Supervision, if so 

directed by the Monetary Board to be disclosed to the public, together with the measures taken by the Bank 

to address such concerns. 

3 (9) Transitional and Other General Provisions 

3 (9) (i) Compliance with this Direction shall commence from 01 January 2008 onwards and all licensed 

commercial banks shall fully comply with the provisions of this Direction by or before 01 January 2009 

except where extended compliance dates have been specifically provided for in this Direction. 


49

3 (9) (ii) In respect of the banks that have been incorporated by specific statutes in Sri Lanka, the boards as 

specified in such statutes shall continue to function in terms of the provisions of the respective statutes, 

provided they take steps to comply with all provisions of this Direction that are not inconsistent with the 

provisions of the respective statutes. 

3 (9) (iii) This Direction shall apply to the branches of the foreign banks operating in Sri Lanka to the extent 

that it is not inconsistent with the regulations and laws applicable in such bank’s country of incorporation. 

The branch of a foreign bank shall also publish its Parent Bank’s annual Corporate Governance report 

together with its Annual Report and Accounts of the branch operations in Sri Lanka. 

3 (9) (iv) In the event of a conflict between any of the provisions of this Direction and the Articles of 

Association (or Internal Rules) pertaining to any bank, the provisions of this Direction shall prevail. 

However, if the Articles of 

Association of an individual bank set a more stringent standard than that specified in this Direction, such 

provisions in the Articles of Association may be followed. 

3 (9) (v) If for any reason such as ill health or any incapacity as provided in the Banking Act, the Monetary 

Board considers that exemptions referred to in Directions 3 (2) (ii) B, 3 (3) (i) A and 3 (3) (ii) A should not be 

availed of, such ground may be notified to the person by the Monetary Board, and after a hearing, the 

Monetary Board may limit the period of exemption 

Level of Compliance with the Code of Best Practice on Corporate Governance issued jointly by The 

Securities and Exchange Commission of Sri Lanka and The Institute of Chartered Accountants of Sri Lanka. 

Subject Disclosure 

Chairman and CEO If Chairman and CEO is one and the same person, 

disclose the Name of the Chairman/CEO and Senior 

Independent Director appointed and justification of the 

decision to combine the positions. 

Board Balance Should identify the Independent Non-Executive Directors 

If a Non- Executive Director is identified as Independent, 

notwithstanding the existence of any of the following 

factors, the reason for such determination should be 

disclosed. 

Appointment of New When new Directors are appointed, the following details 

Directors should be disclosed: 

A brief resume of each such Director; 

The nature of his expertise in relevant functional areas; 

The names of companies in which the Director holds 

directorships or memberships in board comities;,and 

whether such Director can be considered independent. 

Nomination Committee the Chairman and members of the Nomination Committee 

should be identified. 

Appraisal of Board Should disclose how performance evaluations have been 

Performance conducted. 

Board Related Disclosures The following details pertaining to each Director should be 

disclosed: 

Name, qualification and brief profile; 

The nature of his/her expertise in relevant functional areas; 

Immediate family and/or material business relationships 

with other Directors of the Company 


50

Names of other listed companies in Sri Lanka in which the 

Director concerned serves as a Director; 

Names of companies in which the Director concerned 

serves as a Director and/or the fact that he/she holds other 

Directorships in the Group Companies; 

Number/percentage of Board meetings of the Company 

attended during the year; 

Names of the committees in which the Director serves 

as the Chairman or a member; and 

Number/percentage of committee meetings attended 

during the year. 

Disclosure of Remuneration A statement of Remuneration Policy and details of 

remuneration of the Board as a whole. 

Major Transactions All major transactions entered into by the Company should 

be disclosed. 

Audit Committee Names of the members of the Audit Committee should 

be disclosed.Basis for determining the independence of 

auditors 

Code of Business Conduct Should disclose whether the Company has a Code of 

and Ethics Business Conduct & Ethics for Directors and members of 

the senior management team. 

Should also disclose an affirmative declaration that they 

have abided by such Code. 

The Chairman must certify that he/she is not aware of any 

violation of any of the provisions of this Code 

Going Concern Should report that the Company is a going concern, with 

supporting assumptions and qualifications as necessary 

Members of Remuneration The names of members of the Remuneration 

CommitteeCommittee should be disclosed in the 

Remuneration Committee Report 

Directors’ Report Should contain the following declarations made by 

The Directors: 

The Company has not engaged in any activities, which 

contravenes laws and regulations 

The Directors have declared all material interests in 

contracts involving the Company and refrained from voting 

on matters in which they were materially interested; 

The Company has made all endeavours to ensure the 

equitable treatment of shareholders; 

The business is a going concern with supporting 

assumptions or qualifications as necessary; and 

They have conducted a review of internal controls covering 

financial, operational and compliance controls and risk 

management and have obtained reasonable assurance of 

their effectiveness and successful adherence herewith 

Financial Statements The Board of Directors should include a Statement of 

Responsibility for the preparation and presentation of 

Financial Statements 

Auditors should also have a statement about their 

reporting responsibility 

Management Report Should include a ‘Management Discussion and Analysis 

Report’ discussing at least the following issues: 

Industry structure and developments; 


51

Opportunities and threats; 

Risks and concerns; 

Internal control systems and their adequacy; 

social and environmental protection activities carried out 

by the Company; 

financial performance; 

material developments in human resources/industrial 

relations; and 

prospects for the future 

Corporate Governance Should disclose the manner and extent to which the 

Report Company has complied with the principles and provisions 

Of the Code. 

Audit Committee Report Should set out the work carried out by the Committee. 

Audit Committee 

The main role and responsibilities, which are clearly identified in the Charter of the Audit Committee, include 

inter alia; the following 

Reviewing the financial information of the Bank in order to monitor the integrity of The Bank’s Financial 

Statements, its Annual Report, accounts etc. 

Monitoring, reviewing and evaluating the adequacy and effectiveness of the Bank’s internal audit function. 

Reviewing the internal audit reports, external audit management letters and subsequent follow up audits 

together with management’s responses to them. 

Evaluating the adequacy and effectiveness of internal controls. 

Ensuring that the Board is made aware of matters which may significantly impact the financial condition or 

affairs of the business, in a timely manner. 

Regularly update the Board about Committee activities and make appropriate recommendations. 

A representative of the Auditor General (External Auditor of the Bank), the Chief Internal Auditor and the 

Chief Financial Officer of the Bank are present at the meetings in addition to the opportunity given to the 

External Auditor to meet the Committee without the Management’s presence where necessary. 

There are no members of the management on the Committee. The General Manager attends the meetings 

by invitation. The other members of the management and other staff members of the Bank are invited to 

attend the meetings when the Committee requires their presence. The Secretary, Bank of Ceylon/ 

Secretary to the Board functions as the Secretary to the Committee. 

Human Resources and Remuneration Committee 

The main responsibilities of the Committee, which are mainly based on the Banking Act Direction No. 11 of 

2007 on Corporate Governance for Licensed Commercial Banks issued by the Central Bank of Sri Lanka 

are as follows: 

Determining the remuneration policy (salaries, allowances and other financial payments) relating to the 

General Manager and Key Management Personnel (KMPs) of the Bank. 

Setting goals and targets for the General Manager and KMPs. 

Evaluating the performance of the General Manager and KMPs against the set targets and goals 

periodically and determining the basis for revising remuneration, benefits and other payments of 

performance-based incentives. 

Reviewing staff matters referred to it by the board 

Determining the Human Resource Policy and Organisational Structure of the Bank. 

According to the aforesaid Banking Act Direction No. 11 of 2007, this Committee has to determine the 

Remuneration Policy relating to Directors. However, in the case of Bank of Ceylon, the remuneration of 

Directors is determined in accordance with the circulars and instructions issued by the Ministry of Finance & 

Planning on behalf of the Government of Sri Lanka, the sole shareholder. The provisions in the Bank of 


52

Ceylon Ordinance No. 53 of 1938 and its amendments, the Act of Parliament which established Bank of 

Ceylon are also taken into consideration with regard to the Directors’ remuneration and benefits given to 

them. A Remuneration Policy for Directors has been adopted by the Board in keeping with the above rules 

and instructions. The details of the remuneration given to Directors are fully disclosed in the Annual Report 

on a yearly basis. 

The remuneration of employees including the General Manager and KMPs is revised once in 3 years with 

the approval of the Minister in charge of the subject of finance in accordance with the provisions of Bank of 

Ceylon Ordinance. Prior to finalising the salary revision, the Committee deliberates on the proposals and 

makes its recommendation. There was no salary revision in year 2010. The next salary revision is due in 

2012. 

Nomination and Corporate Governance Committee 

The Committee is mainly responsible for the following: 

Implementing procedures to select/ appoint the General Manager (GM) and Key Management Personnel 

(KMPs). 

Setting the criteria such as qualifications, experience and key attributes for eligibility to be considered for 

appointment or promotion to the post of GM and the key management positions. 

Ensuring that GM and KMPs are fit and proper persons to hold office as specified in the criteria given in 

Direction No. 3 (3) of the Banking Act Direction No. 11 of 2007 on Corporate Governance for Licensed 

Commercial Banks issued by the Central Bank of Sri Lanka and as set out in the statutes. 

Considering and recommending from time to time, the requirements of additional/new expertise and 

succession arrangements for KMPs. 

Determining the methods and execution of the annual evaluations of the Board’s and each Board 

subcommittees' effectiveness and supporting the annual performance evaluation process. 

Reviewing periodically the Bank’s Code of Ethics 

Integrated Risk Management Committee 

The main role and responsibilities of the Committee are to assist the Board in fulfilling its oversight 

responsibilities for all aspects of risk management. In this connection the Committee focuses on and 

reviews risks such as credit, market, liquidity, operational and strategic risks through appropriate risk 

indicators and management information. 

In addition to the above, the Committee is responsible for reviewing and/or recommending the following 

which are identified in the Charter of the Integrated Risk Management Committee: 

Policies, programmes and management committee charters relating to risk management and compliance. 

Risk limits and policies that establish appetite for credit, market, liquidity and operational risks, as 

recommended by the Chief Risk Officer. 

Adequacy and effectiveness of all management level committees such as the Credit Committee and Assets 

& Liability Management Committee to address specific risks and to manage those risks within quantitative 

and qualitative risk limits as specified by the Committee. 

Risk management reports on the risk profile of the Bank, as well as emerging market and regulatory risks 

and actions undertaken to identify, measure, monitor and control such risks. 

Corrective action to mitigate the effects of specific risks in case such risks are beyond the prudent levels 

decided by the Committee on the basis of the Bank’s policies and regulatory and supervisory requirements. 

Appropriate actions against the officers responsible for failure to identify specific risks and prompt corrective 

action as directed by the Director of Bank Supervision or otherwise. 

Adequacy and effectiveness of risk identification, measurement, monitoring and mitigation relating to credit, 

market, liquidity, operational and compliance risks. 

The Committee is conscious, when carrying out its responsibilities, that banks are in the business of taking 

risk. The aim of the Bank and the Committee is therefore not to minimise risks but to optimise it by ensuring 

that risks being taken are; properly identified and understood; appropriate; relative to the scale and type of 

business; affordable; properly controlled and managed; and earning an appropriate return. 


53

7. CORPORATE MANAGEMENT 

NAME DESIGNATION QUALIFICATION & EXPERIENCE 

Ms. W .A. Nalani General Manager BA (Econ.) BPhil. (Econ.) AIB, FIB (Sri Lanka), 

Over 36 years of banking experience 

Mr. K .Dharmasiri 

Mr. H. M. A. B. 

Weerasekara 

Dr. C. Samarasinghe 

Mr. D.M. Gunasekara 

Mr. H.M. Mudiyanse 

Mrs. Deepa N 

Wanniarachchi 

Mr. P.A. Lionel 

Mr. M .K .Nandasiri 

Mrs. Dayani 

Fernando 

Mr. Jinadasa K. 

Gamage 

Mrs. Janaki 

Siriwardena 

Mr. A. Rupasinghe 

Additional 

General Manager 

(Recovery) 

Additional 


(International & 

Treasury) 

Additional 


(Product & 

Development Banking) 

Deputy General 

Manager(Retail 

Banking) 

Deputy 


(Sales and Channel 

Management) 

Deputy 


(Finance & Planning) 

Deputy 


(Investments & Human 

Resource) 

Deputy 


(Support Services) 

Deputy General 

Manager(Corporate & 

Off Shore Banking) 

Chief Legal Officer 

Secretary Bank of 

Ceylon/Secretary to the 

Board 

Bcom- first class Hons, BPhil. (Econ), 

AIB (Sri Lanka) 


BA Econ (Hons) 

BPhil (Industrial management), Over 36 years of 

banking experience 

BA (Hons) BPhil (Econ), Phd (Social Science) 


Bsc Special Degree in Public 

Finance & Taxation. AIB (Sri Lanka.) Over 28 

years of banking experience. 

AIB (Sri Lanka.) Obtained a postgraduate 

Diploma in Executive Bank Management. Over 

38 years banking experience. 

B.Com (Special), Post Graduate Diploma in 

Business & Finance Administration in ICASL in 

association with Cranfield University School of 

Management, UK. 


BA Special Degree in University of Colombo, 

Over 28 years experience in banking and 

financial services specially in the areas of 

Treasury, International Operations and 

Investment 

BA (Hons) 

(1 st Class)(Econ),Bphil(Econ), 

AIB(Sri Lanka) 


Bcom (Hons) BPhil (Econ) over 36 years 

banking experience 

Attorney-at-Law and Notary Public(SL), 

LL.B(SL) Over 31 years of experience in Legal 

Affairs. 

She holds Bachelor’s Degree in Law & MBA 

from the University of Colombo (Sri Lanka). Over 

15 years experience as Secretary to the Board in 

Bank of Ceylon. 

Chief Financial Officer B.Sc-Business Administration 

FCA(Sri Lanka) 

MBA in Finance University of southern 

Queensland, Australia 


54

Mr.T. Fernandopulle Chief Risk Officer 

Dr. Lionel 

Siriwardena 

Mr. R. Peiris 

Dr. W. G. 

Karunadasa 

Head of Research and 

Development 

Head of Information 

Technology 

Chief Internal auditor 

Mr. M .F. Gafoor Head of Marketing 

The General Manager is not and was not: 

Over 24 years experience in financial sector 

B.Sc (Hons)(London) M.Sc (London) F.C.I.B. 

(London) President of Charted Institute of 

Bankers (Sri Lanka) Over 31 years banking 

experience. 

M.A in Economic, Phd in Social Siance. Over 21 

years expiresnce Bnaking Sector 

macroeconomics research an Analyes 

MSc-IT(UK), CITP(UK), MBCS(UK), MPMI(UK), 

MCSSL, Over 28 experience in fields of data 

processing and information Technology. 

CDBA (Oxford) DBA(EU), MBA,FCA,FSCMA, 

CMA (AUS) 

Over 31 years of experience in the field of 

accounting, Auditing and financial management 

31 years marketing experience with British 

American Tobacco Company and its subsidiaries. 

Former General Manager of Whittals Insurance 

and DHL Colombo. 

a) Involved in a petition under any bankruptcy laws filed against such person or any partnership in 

which he was a partner or any corporation of which he was an executive officer; 

b) Involved in a conviction for fraud, misappropriation or breach of trust or any other similar offence 

which the CSE consider as a disqualification; or 

c) The subject of any order, judgement or ruling of any court of competent jurisdiction temporarily 

enjoining him from acting as an investment advisor, dealer in securities, director or employee of a 

financial institution and engaging in any type of business practice or activity. 

Aggregate emoluments of the chief executive officer and the corporate management team including 

bonus/profit sharing for 2010 is Rs. 46.2 Mn and estimated at Rs.45.1 Mn for 2011. 


55

8. PROPERTIES 

Details of the Properties of the Bank (Freehold Properties and Leasehold Properties) are given in the 

Annexure VI 


56

9 STATUTORY AND OTHER GENERAL INFORMATION 

9.1 Inspection of Documents 

Extracts from the Bank of Ceylon Ordinance are set out in Annexure 1 and forms part of this 

Prospectus. This prospectus will be available at the official website of BOC at www.boc.lk and the 

website of CSE (www.cse.lk) until the subscription list closes. 

The Bank of Ceylon Ordinance, the Auditors Report and all other documents referred to in this 

Prospectus can also be inspected at any time during the normal business hours at the Head Office 

of BOC from the date hereof, until the subscription list closes. 

9.2 Brokerage 

Brokerage at the rate of 25 cents per Debenture will be paid in respect of the number of Debentures 

allotted on applications bearing the stamp of any member and Trading member of the CSE, or any 

agent appointed by BOC. 

9.3 Trustee Fees 

The fee payable to the Trustees will be LKR 300,000 p.a. plus statutory levies. 

No conflict of interest with the Trustee 

9.4 Expenses of this Issue 

The total expenses of the issue including the cost of printing, advertising and promotional costs 

connected with the issue will be approximately LKR 25Mn and will be met from the funds of BOC. 

9.5 Underwriting 

The Debenture issue is not underwritten. In the event the issue is under subscribed, the subscribers 

shall be allotted in full and the quantum of the funds raised will be utilised for the purpose detailed 

in section 2.3 of this Prospectus. 

9.6 Material Contracts 

BOC has not entered into any material Contracts as at date other than the Contracts entered into in 

the Ordinary Course of Business. 

9.7 Litigation, Disputes and Contingent Liabilities 

There are 136 actions filed against the Bank in its routine banking operations and these actions 

mainly relate to the following categories. 

a) Injunction 

b) Stay Orders 

c) Leave to Appeal. 

The Bank is of the view that, most of these actions have been successfully defended by the Bank 

and even if the Bank is unsuccessful in the few exceptions where the judgement could be against 

the Bank such result will not be of detriment to the financial stability of the Bank. 

Information relating to litigation, Disputes & Contingent Liabilities against the Bank is given in Note 

43 of the Financial Statements for the year ended 2010. 

There are no penalties imposed by any regulatory and/or state authority against the Bank as at 

date. 


57

Declaration by the Directors 

We the undersigned being the Directors of Bank of Ceylon, hereby declare and confirm that the 

Prospectus has been seen and approved by us and we collectively and individually accept full 

responsibility for the accuracy of the information given and confirm that, the provisions of the 

Colombo Stock Exchange listing rules have been complied with and after making all reasonable 

enquiries and to the best of our knowledge and belief, there are no other facts the omission of 

which would make any statement herein misleading or inaccurate. Where representations 

regarding the future performance of the entity have been given in the Prospectus, such 

representations have been made after due and careful inquiry of the information available to the 

entity and making assumptions that are considered to be reasonable at the present point in time 

and according to our best judgment. 

Dr. G. Wickramasinghe (Sgd) on ……… 2011 

Mr. S. R. Attygalle (Sgd) on ……… 2011 

Mr. R. Sivaraman ((Sgd) on ……… 2011 

Ms N. Abeywardene (Sgd) on ……… 2011 

Mr. C. De Silva (Sgd) on ……… 2011 

Mr. K. L. Hewage (Sgd) on ……… 2011 


58

Declaration by the Bank 

An application has been made to the Colombo Stock Exchange for permission to deal in and 

obtain a listing for the Debentures to be issued by the Bank pursuant to this Prospectus. Such 

permission will be granted when the Debentures are listed on the Main Board of the Debt System 

of the Colombo Stock Exchange. The Colombo Stock Exchange assumes no responsibility for 

the accuracy of the statements made or opinions expressed or reports included in this prospectus. 

Listing on the Colombo Stock Exchange is not to be taken as an indication of the merits of the 

Bank or of these Debentures. 

Mr. P. A. Lionel Mr.H.S. Jayawardana 

Deputy General Manager Assistant General Manager 

Investment & Human Resource Investment Operations 

Declaration by the Managers to the Issue 

We, Investment Banking Division of Bank of Ceylon, 23 rd Floor, No:04, Bank of Ceylon Mawatha, 

Colombo 01 being the Managers, Sponsors and Registrars to this Debenture issue, hereby 

declare and confirm that to the best of our knowledge and belief the prospectus constitutes full 

and true disclosure of all material facts about the issue and the BOC. 

. 

Mr. P. A. Lionel Mr.H.S. Jayawardana 

Deputy General Manager Assistant General Manager 

Investment & Human Resource Investment Operations 


59

EXTRACTS FROM THE BANK OF CEYLON ORDINANCE 


60 

Annexure I 

Board of Directors 6. (1) The Management and administration of the affairs of the 

of the Bank Bank shall be vested in a Board, consisting of six directors 

appointed by the Minster, one of whom shall be a representative of 

the Ministry charged with the subject of Finance (hereinafter 

referred to as the “ex officio director ”) 

(2) The Board may exercise, discharge or perform the powers, 

functions or duties of the bank for the purpose of carrying on the 

business, and administering the affairs of the bank. 

(3) No act or proceeding of the Board shall be invalid by reason only 

of the existence of any vacancy among the Directors or any defect 

in the appointment of a Director or authorization by the ex officio 

director under subsection (8) 

(4) A Member of Parliament shall not be qualified to be a Director. 

(5) The Minister shall appoint one of the appointed Directors as the 

Chairman of the Board. 

(6) Every appointed Director shall hold office for a period of three 

years, unless he is earlier removed from office or vacates his 

office. 

(7) If any appointed Director is temporarily unable to discharge the 

duties of his office on account of ill health, or absence from Sri 

Lanka, or any other cause, the Minister may appoint some other 

person to act as a Director in his place. 

(8) If the ex officio Director is unable to attend any meeting of the 

Board, he may authorize any other officer to be present on his 

behalf at such meeting; and the officer so authorised shall be 

deemed for the purpose of such meeting to be a member of the 

Board. 

(9) An appointed Director may resign his office by letter addressed to 

the Minister. 

(10) The Minster may, if he thinks it expedient to do so, remove an 

appointed Director from office. 

(11) A Director who vacates office by resignation or efflux ion of time 

shall be eligible for re-appointment. 

(12) The ex officio Director shall have all the same rights and privileges 

as the appointed Director. 

(13) The provisions of subsections (1), (2) and (3) shall be deemed to 

have come into operation on October 12, 1961.

Disclosure of 11 A Director who or whose spouse or dependent child or a firm or 

Interest by a company in which such Director, his spouse or dependent child 

Director has a substantial interest is directly or indirectly interested in any business 

transacted or proposed to be transacted by the Bank shall disclose the 

nature of such interest at the meeting of the Board. where such business is 

discussed. The disclosure shall be recorded in the minutes of the Board 

and such Director shall not take part in any deliberation or decision of the 

Board with regard to that business and shall withdraw from such meeting 

whilst such deliberation is in progress or decision is being made. 

Business which 71 Subject to the provisions of this Ordinance the business which the 

the Bank may bank is authorized to carry on and transact shall be the several kinds 

transact of business specified in Part 1 of the First Schedule subject to the 

limitations mentioned in Part II thereof. 

FIRST SCHEDULE 

PART I 

Business which 1 The Bank is authorized to carry on and transact the several kinds of 

the bank is business hereinafter specified, namely:- 

authorised to carry 

on and transact 

To carry on (a) To establish, carry on, develop and extend in Sri Lanka and 

business of elsewhere the business of banking in all its branches and 

banking departments and in particular and without prejudice to the 

generality of the foregoing to exercise, perform and do all or 

Any of the following powers, acts and things subject nevertheless to the 

restrictions and conditions set out in Part II of this Schedule. 

To open accounts (b) (i) To open, maintain and manage current deposit, saving and other 

accounts; 

To discount bills (ii) To discount, buy, sell and deal in bills of exchange, promissory notes, 

hoondies, poorjas, coupons, drafts, bills of lading, warrants, debentures, 

certificates, scrip and other instruments and securities, whether 

transferable or negotiable or not: 

To issue letter of (iii) To grant and issue letters of credit and circular notes: 

credit 

To deal in bullion and (iv) To buy, sell and deal in bullion and specie and engage in 

specie operations in exchange. 

To negotiate loans (v) To negotiate loans and advances, to receive money Securities 

and valuables on deposit, or for safe custody, or otherwise: 

To collect money (vi) To collect and transmit money and securities. 

To transact agency (c) To manage property and transact all kinds of agency business 

business commonly transacted by bankers. 

To borrow or raise (d) To borrow or raise money in such manner as the bank shall think fit 

money and to secure the repayment of any money borrowed, raised or 

owing by mortgage, charge or lien upon the whole or any part of the bank’s 

property or assets whether present or future including its uncalled capital 

and also by a similar mortgage, charge or lien to secure and guarantee the 

performance by the bank of any obligation or liability it may undertake. 


61

To lend and (e) To lend and advance money securities and property or give credit to 

advance money such persons, firms or companies and on such terms as may seem 

expedient and either with or without security and if with security upon such 

security and with such conditions as may from time to time be deemed to 

be advisable. 

To buy and sell (f) To buy, sell, invest, underwrite, deal in and dispose of stocks, shares, 

stocks and shares debentures, mortgages, bonds, or securities issued or guaranteed by the 

Government of Sri Lanka or by the Government of any other country or by 

any company or corporation 

Provided, however, that the bank shall not enter into any transaction 

affecting the stocks, shares, debentures, mortgages, bonds or securities 

issued or guaranteed by any other country or by any such company or 

corporation except with the approval of not less than four Directors of the 

bank given after considering the written observations of the General 

Manager of the Bank, and with the written consent of the Minister. 

To acquire any 

other business (g) To acquire and undertake the whole or any part of the banking and 

discount business of any person or company carrying on business which 

the bank is authorized to carry on; 

Provided, however, that the power contained in this paragraph shall only 

be exercised with the approval of not less than four Directors of the Bank 

given after considering the written observations of the General Manager of 

the Bank, and with the written consent of the Minister. 

To acquire property (h) To purchase, take on lease or in exchange, hire or otherwise acquire, any 

immovable or movable property and any rights or privileges. 

To enter into (i) To enter into any arrangement for sharing profits, union of interest, 

arrangement for co-operation, joint ventures, reciprocal concession or otherwise with 

profit sharing any person or company carrying on or engaged in or about to carry on or 

engaged in any business or transaction. 

To act as trustees, (j) To undertake and execute any trusts the undertaking whereof may 

executors, etc. seem desirable, and also to undertake the office of executor, administrator, 

receiver, treasurer, or registrar, and to keep for any company, Government, 

authority, or body, any register relating to any stocks, funds, shares or 

securities, or to undertake any duties in relation to the registration of 

transfers, the issue of certificates, or otherwise. 

To provide for (k) To establish and support or aid in the establishment and support of 

employees associations, institutions, trusts, schemes for the providing of pensions and 

of guarantee and other funds, and conveniences calculated to benefit 

employees or ex-employees, of the bank or the dependants or connexions 

of such persons and to grant pensions and allowances, and to make 

payments towards insurance, and to subscribe or guarantee money for 

charitable or benevolent objects or for any exhibition or for any public, 

general, or useful object. 

To sell undertaking (l) To sell or dispose of the entire undertaking of the bank, or any part thereof, 

for such consideration as the bank may think fit, and in particular for 

shares, debentures or securities of any other bank or to amalgamate the 

bank’s business with that of any other bank. 

Provided, however, that the powers contained in this paragraph shall only 

be exercised with the approval of at least four directors of the bank given 


62

after considering the written observations of the General Manager of the 

Bank, and with the written consent of the Minister. 

To deal with the (m) To construct buildings on or improve or develop any land belonging 

property of the to or taken on lease or possessed or occupied by the bank and to 

bank manage, exchange, lease, mortgage, dispose of, sell, turn to account or 

otherwise deal with all or any part of the property and rights of the bank. 

To exercise it’s (n) To do all or any of the above things in any part of the world and as 

powers in any part principals, agents, contractors, trustees or otherwise and by or 

of the world through trustees, agents or otherwise and either alone or in conjunction 

with others. 

To support the (o) To take or concur in taking all such steps and proceedings as may 

credit of the bank seem best calculated to uphold and support the credit of the bank and to 

obtain and justify public confidence and to avert and minimize financial 

disturbances, which might affect the bank. 

To procure (p) To procure the bank to be registered or recognized in any foreign 

recognition of the country or place. 

bank 

To obtain (q) To give any guarantee or indemnity and to enter into any 

concessions arrangement with any Government or any local authority in order to obtain 

any rights, concessions and privileges. 

To do hire- (r ) To do hire-purchase business and receive discounts, commissions 

purchase business and other remuneration. 

To form (s) To form any company for carrying on any business, to acquire and 

companies undertake the business of, purchase any interest in, or acquire or hold 

shares or stock in, any company carrying on any business. 

To carry on any (t) To carry on such other trade or business or engage in such other 

trade or business activity, which can in the opinion of the bank be advantageously carried on or 

engaged in by the bank. 

General (u) To do all things incidental or conducive to the attainment of the 

above objects or the exercise of the above powers. 

Interpretation of 2. The objects set forth in any paragraph of clause 1 of this schedule 

objects shall not, except where the context expressly so requires, be in any wise 

limited or restricted by reference to or inference from the terms of any other 

paragraph or the objects therein specified, and the powers thereby 

conferred shall not be deemed merely subsidiary or auxiliary to the objects 

mentioned in the first paragraph of clause 1 of this Schedule but the bank 

shall, except when the context expressly requires otherwise, have full 

power to exercise all or any of the powers conferred by any part of clause 1 

of this schedule in any part of the world. 

PART II 

Restrictions and 3. The business of the bank shall be carried on subject to 

qualifications the following restrictions and qualifications: 

Loans, Overdrafts, (a) No loan, overdraft, advance or other accommodation 

advances, and shall be granted by the bank to any person unless 

other accommodation the Board is satisfied that he is worthy of credit up to 

to be granted only the amount of such advance, loan or other 


63

in certain accommodation or that such amount is secured by 

circumstances adequate security, or that the project or scheme to which such 

amount is to be applied is financially sound; 

Provided that the bank may grant any loan, overdraft, advance or 

other accommodation to any Government department, corporation, 

statutory body, local authority, co-operative society, approved 

society or unincorporated body of persons which is unable to 

satisfy the board as to the requirement contained in the preceding 

provisions of this paragraph if the grant of such loan, overdraft, 

advance or other accommodation is approved by the Minister in 

consultation with the Minister in charge of the subject of Finance 

and if the Minister in charge of the subject of Finance guarantees 

under section 10 the repayment of such advance, loan or other 

accommodation. 

Loans to directors 

and companies (b) (i) Where prior to the date of his appointment as a director no sum 

has been granted by way of loan, overdraft, advance or other 

accommodation to such director or any company or firm in which 

he has a substantial interest, then, no loan, overdraft, advance, or 

other accommodation shall be granted to any such company or 

firm, but a sum not exceeding fifty thousand rupees in the 

aggregate may be granted to such director by way of loans, 

overdrafts, advances and other accommodation. 

(II) Where prior to the date of his appointment as a director any sum 

has been granted by way of loan, overdraft, advance or other 

accommodation to such director or any company or firm in which 

he has a substantial interest, then such director, company or firm 

may be granted by way of loans, overdrafts, advances or other 

accommodation a sum which does not exceed the aggregate of 

the sums granted to such director, company or firm prior to the 

date of such appointment, less any sum remaining unpaid. 

Provided that where any sum so granted to a director prior to his 

appointment as a director is a sum not exceeding fifty thousand 

rupees such director may be granted by way of loans, advances, 

overdrafts and other accommodation a sum not exceeding fifty 

thousand rupees in the aggregate, in addition to any sum 

remaining unpaid. 

(iii) No loan, overdraft, advance or other accommodation 

shall be granted to a director for the time being of the bank or a 

firm, or company in which he has a substantial interest unless 

security approved by the bank is given and the loan, overdraft, 

advance or other accommodation is sanctioned at a meeting of the 

board by not less than four other directors. 

Restriction on *(e) No advance, loan or accommodation shall be granted 

granting of loans to any General Manager, Assistant General Manager, or Branch 

Manager, or any officer, clerk, or servant of the bank exceeding the 

sum of five hundred rupees except against appropriate banking 

security; any loans exceeding five hundred rupees to such persons 

shall only be granted with the previous approval of the board. 

Guarantee by (f) No loan, overdraft, advance or other accommodation 

employees shall be granted by the bank on the guarantee of an employee of 

the bank other than to another employee of the bank. 


64

How may powers 4 All the powers contained in clauses 1 and 2 of this 

be construed schedule shall be read and construed subject to the restrictions 

and qualifications in clause 3 of this Schedule and in case of 

conflict or inconsistency the provisions of clause 3 of this Schedule 

shall prevail. 

SECOND SCHEDULE 

PART 1 

Proceedings of Directors 

Meetings of 

Directors 1. The Directors may meet together for the dispatch of 

business, adjourn and otherwise regulate their meetings as they 

think fit and may determine the quorum necessary for the 

transaction of business. Until otherwise fixed the quorum shall be 

three. 

Who may preside 

at meetings 2. The Board shall be presided over by the Chairman if 

present, or in his absence, by the deputy Chairman, if 

any, but if neither a Chairman nor a Deputy Chairman shall have 

been appointed, or if neither the Chairman nor the Deputy 

Chairman be present at the time fixed for holding the meeting of 

the Board, the directors present shall choose one of their number 

to preside. 

How questions at 3. Any questions which shall arise at any meeting of the 

Board meetings Board shall be decided by a majority of votes of those 

decided present, and in the case of an equality of votes the Director 

presiding at the meeting shall have a second or casting vote. 

Acts to be valid 4 All acts done by the Board or by a committee of 

notwithstanding Directors or by a person acting as Director, whether 

defects in solely or as a member of the Board or of a committee, 

appointments shall, notwithstanding that it be afterwards discovered that there 

was a defect in the appointment of the Board, Committee, or 

person acting as Director, or that such person was not qualified to 

be a Director, be as valid as if there had been no such defect and 

the person acting as Director had been duly qualified. 

Meetings of 5 The meetings and proceedings of any committee shall 

committees be governed by the provisions of this Schedule for regulating the 

meetings and proceedings of Directors, so far as the same are 

applicable thereto, and are not superseded by the express terms of 

the appointment of the committee. In any matter in which no 

provisions are made by the Board or by this Schedule a Committee 

may conduct its business in such manner as it thinks fit. 

Minutes of 6 (1) The Board shall cause minutes to be made in books 

proceedings of provided for the purpose of the following matters, 

Directors to be namely, 

kept. (a) All appointments of officers and committees made by the Board; 

(b) The names of the Directors present at every meeting of the Board, 

and at every meeting of a committee; 


65

(c) The proceedings and resolutions of all meetings of the board and 

Committees. 

(2) Such minutes if signed by some person purporting to be the 

Chairman of the meeting or of the Board or Committee to which it 

refers, or by any two directors present thereat, or by the Chairman 

of the next succeeding meeting, shall be receivable in evidence 

without further proof of the matters therein contained or any other 

proof. 

Custody and use 

of common seal 7 (1) The Board shall provide a common seal for the purpose of the 

bank and may from time to time change the same; and such seal 

may be kept by such person and in such manner as the board from 

time to time may determine, but shall not be used except by the 

authority of the board and in the presence of at least two Directors, 

or of one Director and the General Manager or other officer 

appointed for that purpose by the Board, who shall sign the 

document to which the seal is affixed. 

(2) The Board shall have full power to use the common seal in the 

execution of all or any of the powers hereby vested in them, or 

otherwise in relation to the affairs and business of the Bank as they 

in their discretion see fit. 

Directors may 8 No Director shall be disqualified by his office from 

contract with bank contracting with the bank nor shall any such contract entered into 

by or on behalf of the Bank in which any Director shall be in any 

way interested, be voided, nor shall any Director so contracting or 

being interested be liable to account to the bank for any profit 

realized by or arising out of any such contract but the fact of his 

being interested and the nature of his interest shall be disclosed by 

him at the meeting of the directors at which the contract is 

considered if his interest then exists, or in any other case at the 

first meeting of the Directors after the acquisition of his interest. 

A general notice that a Director is a member of a specified firm or 

company, and is to be regarded as interested in any subsequent 

transactions with such firm or company, shall be sufficient 

disclosure under this by-law, and after such general notice it shall 

not be necessary to give any special notice relating to any 

particulars transaction with such firm or company. 

When Director 9 No Director shall as a Director vote in respect of any 

may not vote contract in which he is so interested as aforesaid and he shall 

withdraw from the meeting of the Directors while any such contract 

is under consideration and the vote thereon is being taken. If any 

Director does so vote, his vote shall not be counted. 

Exception from 10 Nothing in by-law 9 shall apply to any contract made by 

Provisions of or on behalf of the Bank to give to the Directors or any 

by Law 9 of them any security for advances or by way of indemnity. 

Delegation of 11 (1) The Board may delegate any of its powers, other than 

functions of the power to appoint the General Manager, to 


66

Board committees consisting of two or more Directors, or to a Director, or 

to the General Manager or to any other officer of the bank selected 

by the Board; and may from time to time revoke any such 

delegation either wholly or in part and either as to persons or 

purposes. Every such committee, Director, General Manager or 

other officer shall, in the exercise of the powers delegated to it or 

him, conform to all such regulations as are prescribed by the 

Board. 

(2) The General Manager may, with the consent of the Board, in 

writing delegate to any of the officers of the Bank selected by him 

any of the powers delegated to him under paragraph (1). Every 

such officer shall in the exercise of the powers delegated to him 

under this paragraph conform to all such regulations as are 

prescribed by the Board and the General Manager. 

(3) All acts done by any such committee, Director, General Manager 

or other officer in conformity with such regulations and in fulfilment 

of the purposes of its or his appointment, but not otherwise, shall 

have the like force and effect as if done by the Board. 

PART II 

Powers and Duties of Directors 

Credits and loans 12 No loan, overdraft, advance or other accommodation 

Shall be sanctioned by the Board without the recommendation of 

the General Manager unless such loan, overdraft, advance or 

other accommodation is approved by all the Directors for the time 

being of the Bank, after considering the written observations of the 

General Manager of the Bank. 

Resolution without 13 (1) A resolution signed by all the Directors of the Bank for 

Board meeting the time being shall be as valid and effectual as if it had 

valid been passed at a meeting of the Board. 

(2) Any such resolution shall be recorded in the minutes 

Book containing the proceedings of the Board as if it had been 

passed at a meeting of the Board. 

PART III 

Remuneration of Directors 

Remuneration of 

Directors 14 A Director may be remunerated out of the funds of the 

Bank in such manner and at such rates as the Minister 

May determine. 

Deduction for 15 A sum of fifty rupees shall be deducted from the 

absence from remuneration of the Chairman or any Director in respect 

meeting of each meeting of the Board, which he fails to attend. 

Remuneration 16 A Director in whose place a person has been appointed 

of acting Director to act shall not receive the remuneration attached to his 

office during the continuance of such acting appointment, but such 

remuneration shall be paid to the 


67

Person acting in his place. 

Remuneration of 17 Where any Director is entrusted with any special 

Directors for mission of function or by request performs special 

Special Services services on behalf of the bank, the Board may grant him such 

additional remuneration as it thinks fit. The Directors may by repaid 

by the Bank all such reasonable travelling, hotel and incidental 

expenses as they may incur in attending meetings of the Board or 

of Committees of the Board or which they may otherwise incur in 

or about the business of the Bank. 

Remuneration of 18 All remuneration to which Directors who are public 

public officers who officers become entitled shall be paid to the 

are directors to be Consolidated Fund. 

paid to Consolidated 

Fund 

PART IV 

Dividends and Reserve 

Half-yearly 19 The Board may- 

Dividends (i) on the report of the General Manager that the profits 

earned by the Bank during any half-year justifies the payment of a 

half-yearly dividend; and 

(i) with the approval of the Minister declare a half-yearly 

dividend. 

Investment of 20 Any amounts standing to the credit of any reserve funds 

Reserve fund and also any other funds of the Bank not for the time 

being employed in or required for the purposes of the business of 

the bank shall be invested with the approval of the Minister in 

stock, shares, debentures, bonds or securities:- 

(a) recommended in writing by the General Manager and 

approved at a meeting of the Board by a majority of not less than 

two Directors; or 

(b) unanimously approved by all the Directors for the time 

being of the bank after considering the written observations of the 

general Manager of the Bank. 


68

Trust Deed 


69 

Annexure II 

Trust Deed for the Issue of up to Fifty Million (50,000,000) Unsecured Subordinated Redeemable 

Five Year Debentures at an issue price of LKR 100/- each by Bank of Ceylon 

No: 02- 2011 

This Trust Deed is made and entered into at Colombo in the Democratic Socialist Republic of Sri Lanka on 

this Nine (9) Day of November in the Year Two Thousand and Eleven (2011). 

By and between 

Bank of Ceylon a Banking Corporation duly established under the Bank of Ceylon Ordinance No. 53 of 

1938 in the Democratic Socialist Republic of Sri Lanka and having its Head Office at No. 4 Bank of Ceylon 

Mawatha, Colombo 1 (hereinafter referred to as “BOC “which term or expression as herein used shall 

where the context so requires or admits mean and include the said Bank of Ceylon its successors and 

assigns) of the ONE PART 

And 

Deutsche Bank AG, Colombo Branch a banking corporation duly incorporated in the Federal Republic of 

Germany and having its Head Office at No. 12, Taunusanlage, Frankfurt am Main, Federal Republic of 

Germany and a Branch Office at No. 86, Galle Road, Colombo 3 in the Democratic Socialist Republic of Sri 

Lanka (hereinafter sometimes called and referred to as the “Trustee” which term or expression as herein 

used shall where the context so requires or admits mean and include the said Deutsche Bank AG, 

Colombo Branch its successors and any additional or new trustee or trustees appointed under this Deed 

whether in substitution or in addition and holding office of Trustee for the time being of this Deed and their 

successors) of the OTHER PART. 

WHEREAS: 

a. BOC being duly empowered in that behalf has by a Resolution passed on 15 th September 2011 by its 

Board of Directors, resolved to raise a sum upto Sri Lankan Rupees Five Billion (LKR 5,000,000,000) 

by the issue of Unsecured Subordinated Redeemable Five Year Debentures of BOC. 

b. The said Debentures shall be constituted in the manner and upon the terms and conditions hereinafter 

contained. 

c. The Trustee has agreed to accept the office of Trustee and act under the provisions of this Deed as 

Trustee for the benefit of and in the interests of the Debenture holders on the terms and conditions 

hereinafter contained.

NOW THIS DEED WITNESSETH AND IT IS HEREBY AGREED AND DECLARED AS FOLLOWS: 

1. DEFINITIONS 

(a) In these presents unless the subject or context otherwise requires the following 

expressions shall have the respective meanings given below: 

1. “BANKING ACT” means the Banking Act No. 30 of 1988 of Sri Lanka as amended 

from time to time. 

2. “CENTRAL DEPOSITORY or CDS” means the Central Depository Systems (Pvt) 

Limited. 

3. “COLOMBO STOCK EXCHANGE or CSE ” means the Colombo Stock Exchange within 

the meaning of the Securities and Exchange Commission of Sri Lanka Act No. 36 of 

1987 as amended from time to time. 

4. “BOC’s CERTIFICATE” means a bi-annual certificate issued by BOC and signed by a 

Deputy General Manager and an Assistant General Manager of BOC. 

5. “DEBENTURE HOLDERS” means the holders of the Debentures for the time being 

whose names are entered as holders of the Debentures in the Register or whose 

accounts are deposited with the Debentures at the CDS as at the relevant date. 

6. “DEBENTURES” shall mean the Unsecured Subordinated Redeemable Five Year 

Debentures to be issued and allotted by BOC in terms of the Prospectus to be issued 

in this connection at an issue price of Sri Lankan Rupees One Hundred (LKR 100/-) 

per Debenture to raise a sum up to the aggregate value of Sri Lankan Rupees Five 

Billion (LKR 5,000,000,000) and categorized as Types A, B and C and morefully 

described below. These Debentures shall rank equal and pari passu with each other 

without any preference or priority one over another except for the interest rates and the 

frequency at which the interest is paid. These Debentures will be listed on the Main 

Board of the Debt system of the Colombo Stock Exchange. 

Types/Categories of the Debentures: 

Type A - Unsecured Subordinated Redeemable Five (05) Year Debentures of LKR 

100 each bearing nominal interest at a fixed rate of eleven per cent (11%) 

per annum on the Principal sum, payable annually (AER 11%) at the 

expiry of every One (01) year period from the date of allotment of the 


Type B - Unsecured Subordinated Redeemable Five (05) Year Debentures of LKR 

100 each bearing nominal interest on the Principal sum at a floating rate 

calculated on the basis set out in Clause 1 (a) 11 below, payable biannually 

at the expiry of every six (06) month period from the date of 


Type C- Unsecured Subordinated Redeemable Five (05) Year Debentures of LKR 

100 each bearing nominal interest at a fixed rate of ten point five per 

cent (10.5%) per annum (AER 10.77%) on the Principal sum, payable biannually 

at the expiry of every Six (06) month period from the date of 



70

7. “DUE DATE OF INTEREST” means the dates on which the interest 

payments shall fall due in respect of the Debentures. 

Interest payments shall fall due in respect of Debentures of, 

Type A, annually at the expiry of every One (01) year period from the date of 


Type B, bi-annually at the expiry of every Six (06) month period from the date of 


Type C, bi-annually at the expiry of every Six (06) month period from the date of 


The first of such interest payment shall fall due in respect of Debentures of Type A on 

the date of expiry of One (01) year and in respect of Debentures of Type B and Type 

C on the date of expiry of Six (06) months from the date of allotment of the 

Debentures. Interest payments shall be made by BOC within Five (05) market days 

from the due dates. 

The final interest payments in respect of Debentures of Types A, B and C shall be 

made with the repayment of the Principal sum on the date of maturity /redemption of 


Interest calculation shall be based upon the actual number of days in each interest 

payment period. 

In order to accommodate the Debenture interest cycles in the Debt Securities Trading 

System (DEX) the payment of interest shall not include Debenture holders holding 

Debentures in the DEX as at the last day of the payment cycle but one day prior to 

the due date of interest (entitlement date). If the entitlement date is a holiday interest 

shall be calculated including the entitlement date. 

8. “ EVENT OF DEFAULT” means any event set out in Clause 12. 

9. “MARKET DAY” means a day on which trading takes place at the Colombo Stock 

Exchange, 

10. “LISTED” means tradable on the Colombo Stock Exchange. 

11. “RATE OF INTEREST” means in respect of Debentures of, 

Type A - A fixed rate of eleven per cent (11%) Per annum on the Principal 

sum, payable annually at the expiry of every One (01) year period 

from the date of allotment of the Debentures. 

Type B- A floating rate of interest equivalent to Seventy Five basis points 

(0.75%) above the Weighted Average Six (06) Month Treasury 

Bill interest rate (before tax) at the Primary Auctions as 

announced by the Central bank of Sri Lanka at the preceding 

week of the interest resetting date for each bi-annual period. This 

rate will be initially decided on the date of allotment of the 

debentures and be applicable for a period of Six (06) months 

commencing from the date of allotment of the Debentures and 

thereafter to be determined/revised bi-annually at the expiry of 

every Six (06) month period from the date of allotment of the 

Debentures on the same basis. The interest rates so established 


71

shall be notified by BOC to the Colombo Stock Exchange and the 

Trustee prior to the commencement of each bi-annual period. 

Provided that if such Weighted Average Six (06) month 

Government of Sri Lanka Treasury Bill Interest Rate has not been 

announced at the preceding week of the interest resetting date for 

a particular bi-annual period, then BOC shall in consultation with 

the Trustee calculate the interest rate applicable for that bi-annual 

period based on the Weighted Average Six (06) Month Treasury 

Bill interest rate (before tax) at the last Primary Auction as 

announced/published by the Central Bank of Sri Lanka before the 

interest resetting date. The rate so established shall be notified by 

BOC to the Colombo Stock Exchange prior to the 

commencement of the particular bi-annual period. 

Interest is payable bi-annually at the expiry of every Six (06) 

month period from the date of allotment of the Debentures. 

Type C- A fixed rate of ten point five per cent (10.5%) Per annum on the 

Principal sum, payable bi-annually at the expiry of every Six (06) 

month period from the date of allotment of the Debentures 

12. “RESOLUTION” means a Resolution passed by the Debenture holders in terms of 

Clause 21 unless otherwise provided for. 

13. “SRI LANKAN RUPEES” and the sign “LKR” mean the lawful currency of the 

Republic of Sri Lanka. 

14. “SUBORDINATE” in relation to the Debentures means that the Claims of the 

Debenture holders shall in the event of winding up of BOC, rank after all the claims 

of Secured and other Unsecured Creditors of BOC and any preferential claims 

under any Statutes governing BOC but in priority to and over the claims and rights 

of the Shareholder/s of BOC. 

15. “REGISTERED ADDRESS” when used in relation to a Debenture holder means the 

respective address of the Debenture holder registered in the Register. In the case 

of the Debentures lodged with CDS the registered address shall be deemed to be 

the address provided by the Debenture holder to the CDS. 

16. “THE DATE OF ALLOTMENT” means the date on which the Debentures will be 

allotted to the Debenture holders under the Prospectus. 

17. “THE DATE OF MATURITY” means the date on which the period of Five (05) 

years from the date of allotment expires. 

18. “THE DATE OF REDEMPTION” means the date of Maturity of the Debentures or 

such earlier date on which the Debentures become payable in terms of these 

presents. 

19. “THE REGISTER” means the register of the Debenture holders hereinafter 

covenanted to be kept by BOC. 

20. “THE REGISTRARS” means Investment Banking Division of Bank of Ceylon or 

such other person or persons to be appointed as the Registrars for the purpose of 

these presents by BOC. 

21. “THESE PRESENTS’’ means this Trust Deed as from time to time modified in 

accordance with the provisions herein contained and/or according to law and shall 


72

include any Supplementary Trust Deed executed in accordance with the provisions 

hereof. 

22. “WORKING DAY “ means any day (other than a Saturday or Sunday or any 

statutory holiday) on which Banks and Foreign Exchange Markets are open for 

business in Sri Lanka. 

23. “TRUST DEED” means these presents including the Schedules hereto as from 

time to time modified in accordance with the provisions herein contained and/or 

according to law and shall include any Supplementary Trust Deed executed in 

accordance with the provisions hereof. 

24. “TRUSTEE” means the trustee above named and any additional or new Trustee or 

Trustees appointed under this Deed whether in substitution or in addition and 

holding office of Trustee for the time being of this Deed. 

(b) Words denoting or importing the singular number shall include the plural number and vice versa 

and words denoting or importing the masculine gender only shall include the feminine gender 

and shall include corporate and unincorporated bodies of persons. 

(c) In these presents references to: 

(i) any provision of any statute shall be deemed also to refer to any statutory 

modification or re-enactment thereof or any statutory instrument, order or 

regulation made there under or under such modifications or re-enactment. 

(ii) Principal and/or interest in respect of the Debentures or to any monies payable by 

BOC under these presents or under the Debentures shall be deemed also to 

include references to any additional amounts which may be payable under these 

presents. 

(iii) Costs, charges or expenses shall include (but not be limited to) the Value Added 

Tax, Turnover Tax or similar tax charged or chargeable in respect thereof. 

(d) References in this Trust Deed to clauses, sub-clauses, paragraphs and sub-paragraphs 

shall be construed as references to the clauses, sub clauses, paragraphs and subparagraphs 

of this Trust Deed respectively. 

(e) The headings are inserted herein only for conveniences and shall not affect the 

construction of these presents. 

2. APPOINTMENT OF THE TRUSTEE 

The Trustee is hereby appointed as Trustee for the purposes of the Debentures and for the benefit 

of and in the interests of the Debenture holders as provided herein and the Trustee accordingly 

accepts the appointment upon the terms and conditions contained herein and agrees to act under 

the provisions of this Deed as the Trustee. 

3. AMOUNT OF THE DEBENTURE ISSUE 

Debentures will be issued by BOC to raise a sum up to Sri Lankan Rupees Five Billion (LKR 

5,000,000,000/-) 

4. COVENANTS TO REPAY THE PRINCIPAL SUM AND INTEREST 

(a) BOC hereby covenants with the Trustee for the benefit of the Debenture holders that it will, 


73

(i) As an when Debentures ought to be redeemed in accordance with the provisions of 

these presents pay to the Debenture holders registered as at the date of 

redemption / maturity by cross cheque marked “ account payee only” sent by 

ordinary mail to the address of Debenture holder recorded with CDS or pay to a 

Bank account or otherwise through electronic fund transfer mechanism recognized 

by banking systems as per information available with CDS or provided direct to 

BOC by the Debenture holders. The principal sum of the Debentures which ought 

to be redeemed and interest (if any) remaining unpaid up to the date of maturity / 

redemption of the Debentures. 

(ii) pay to the Debenture holders registered as at the due date of interest by crossed 

cheque marked “Account payee only” sent by Ordinary mail to the Address 

recorded with CDS or pay to a bank account or otherwise through electronic fund 

transfer mechanism recognized by banking systems as per information available 

with CDS or provided direct to BOC by the Debenture holders, interest on the 

principal sum of the Debentures for the time being outstanding at the said rate of 

interest in accordance with the provisions of these presents. 

Interest payments shall fall due in respect of Debentures of 

Type A, annually at the expiry of every One (01) year period from the date of 


Type B, bi-annually at the expiry of every Six (06) month period from the date of 


Type C, bi-annually at the expiry of every Six(06) month period from the date of 

allotment of the Debentures 

The first of such interest payment shall fall due in respect of Debentures of type A 

on the date of expiry of One (01) year and in respect of Debentures of Type B and 

Type C on the date of expiry of Six (06) months from the date of allotment of the 

Debentures, interest payments shall be made by BOC within Five (05) market 

days from the due dates. 

The final interest payments in respect of Debentures of Types A, B and C shall be 

made with the repayment of the Principal sum on the date of maturity/redemption 

of the Debentures. 

Interest calculation shall be based upon the actual number of days in each interest 

payment period. (Actual/Actual) 

Payment of the Principal sum and interest shall be made in Sri Lankan Rupees 

after deducting any Withholding Tax and/or such other taxes and charges thereon, 

if applicable. 

(iii) The debentures shall be redeemed in accordance with the provisions contained in 

these presents on the date of maturity or on such earlier date in the event of default 

together with interest (if any) remaining unpaid therefore. 

(iv) If any cheques for redemption or interest payment sent by post to the Debenture 

holders are returned to BOC undelivered or payments made through electronic 

fund transfer systems are rejected by the receiving end, the amounts represented 

by each of such returns or rejections shall be transferred by BOC to a suspense 

account and retained therein for a period of Six (06) years from the date of maturity 

of the Debentures. Such monies will be repaid to the Debenture holders if the same 

is claimed in writing by such Debenture holder within the said Six (06) years period. 

No person shall be entitled to claim any such redemption and interest payment 


74

after the completion of six years from the date of maturity and all unclaimed monies 

shall cease to be owed and payable by BOC to any Debenture holder after the said 

period of Six (06) years. 

(v) BOC shall always act on the information furnished by the CDS and it shall be the 

responsibility of each such Debenture holder to keep all the information in respect 

of such Debenture holder updated. Each debenture holder shall absolve BOC from 

any responsibility or liability in respect of any error or absence of necessary 

changes in the information recorded with the CDS. 

(vi) BOC shall be entitled to make payment on redemption of all such Debentures on the 

date of maturity to such Debenture holders without any request for claim from such 

Debenture holders and BOC shall accordingly send the crossed cheques marked “ 

Account payee only” for such payments to the addresses (as furnished by the 

CDS) of such Debenture holders recorded with CDS or pay to a bank account or 

otherwise through electronic fund transfer mechanism recognized by banking 

system as per information available with CDS or provided direct to BOC by the 

Debenture holders and such payment shall be deemed to be a payment duly made 

by BOC to the respective Debenture holders in redemption of the Debentures of 

such Holders. 

In order to accommodate the Debenture interest cycles in the Debt Securities 

Trading System (DEX) the payment of interest shall not include Debenture holders 

holding Debentures in the DEX as at the last day of the payment cycle but one 

day prior to the due date of interest (entitlement date). If the entitlement date is a 

holiday interest shall be calculated including the entitlement date 

(b) If the date of redemption/maturity falls on a non working day on which the Banks 

are closed for business in Sri Lanka, then the Debentures will be redeemed without 

any additional interest on the next working day when the Banks are open for 

business in Sri Lanka. 

5. DEPOSIT OF DEBENTURES INTO CDS ACCOUNTS 

BOC shall within 18 market days from the date of closing of the issue deposit the Debentures into 

CDS accounts of the Debenture holders in accordance with the Rules of the CDS/ CSE as provided 

in the debenture application, with intimation to the debenture holders to this effect. 

6. STAMP DUTY & OTHER CHARGES (IF ANY) 

BOC shall pay all charges, stamp duties and other similar duties or taxes (if any) payable on or in 

connection with (I) the issue of the Debentures and (II) the execution of these presents. 

7. ELIGIBILITY FOR DEBENTURES 

The debentures may be issued to: 

(a) Residents in Sri Lanka 

(i) Individuals who are resident in Sri Lanka and above 18 years of age. 

(ii) Corporate bodies and societies registered/ incorporated/established in Sri Lanka 

and authorized to invest in the Debentures. 

(iii) Approved Provident Funds, Trust Funds and Contributory Pension Schemes 

registered/established in Sri Lanka and authorized to invest in the Debentures. 


75

In the case of Approved Provident Funds, Trust Funds and Contributory Pension schemes 

the Application should be in the name of the Board of Management/Trustee of such 

Approved Provident Funds, Trust Funds and Contributory Pension Schemes in order to 

facilitate the opening of the CDS Accounts. 

(b) Foreign investors 

(i) Foreign institutional investors, corporate bodies incorporated outside Sri Lanka 

(ii) Individuals above 18 years of age resident outside Sri Lanka 

“Individuals resident outside Sri Lanka” shall have the same meaning as in the notice 

published under the Exchange Control Act in gazette no. 15007 dated 21/04/1972. 

8. The Conditions attached to debentures 

(a) The debentures as part of a series of Unsecured Subordinated Redeemable five year 

Debentures issued by Bank of Ceylon at an issue price of LKR 100 per debenture and rank 

pari passu with each other and without any preference or priority one over another except 

for interest rates and the frequency at which the interest is paid. These debentures will be 

listed on the main Board of the Debt Securities Trading System of the Colombo Stock 

Exchange (CSE). 

(b) BOC shall keep a Register of Debentures and enter therein particulars of the issue and all 

changes of ownership of the Debentures as provided for in the said Trust Deed. 

(c) BOC shall recognize and treat the registered debenture holder(s) as the owner hereof and 

as alone being entitled to receive and give effectual discharges for the monies hereby 

covered 

(d) The Principal sum and interest (if any) under this Debenture shall be paid by crossed 

cheque sent by post to the registered address of the debenture holder or pay to a bank 

account or otherwise through electronic fund transfer mechanism recognized by banking 

systems as per information available with CDS or provided direct to BOC by the Debenture 

holders. In the case of joint debenture holders to the registered address of one of the said 

joint Debenture holders who is named first on the Register of debenture holders. 

(e) Subject to the provisions contained in clause 11 below these debentures shall become 

immediately payable in any of the events described under clause 12 occurs. 

(f) Repayment before maturity of the principal sum on the Debentures or any part thereof in 

any circumstance shall be subject to the prior approval of the Debenture holders of 3/4th of 

the face value of the Debenture outstanding at that time and the prior written consent of the 


9. TRANSFER OF DEBENTURES 

(a) These debentures shall be freely transferable and the registration of such transfer shall not 

be subject to any restriction, save and except to the extent required for compliance with 

statutory requirements. 


76

(b) The Debentures shall be transferable and transmittable through the CDS as long as the 

Debentures are listed in the CSE. Subject to the provisions contained herein BOC may 

register without assuming any liability any transfer of debentures, which are in accordance 

with the statutory requirements and rules and regulations in force for the time being as laid 

down by the CSE, SEC and the CDS. 

(c) In the case of death of a Debenture holder 

The survivor where the deceased was a joint holder; and 

The executors or administrators of the deceased or where the administration of the 

estate of the deceased is in law not compulsory the heirs of the deceased where such 

Debenture holder was the sole or only surviving holder; shall be the only persons 

recognized by BOC as having any title to his/her debentures 

(d) Any person becoming entitled to any Debenture in consequence of bankruptcy or winding 

up of any Debenture holder, upon producing proper evidence that he/she sustains the 

character in respect of which he/she proposes to act or his/her title as the Board of 

Directors of BOC thinks sufficient may in the discretion of the Board be substituted and 

accordingly registered as a Debenture holder in respect of such Debentures subject to the 

applicable laws rules and regulations of BOC, CDS, CSE and SEC. 

(e) No change of ownership in contravention to these conditions will be recognized by BOC. 

10. COVENANT TO OBSERVE PROVISIONS OF THE TRUST DEED AND SCHEDULES. 

BOC hereby covenants with the Trustee to comply with the provisions contained herein and to 

perform and observe the same. It is expressly agreed between BOC and the Trustee that the 

Trustee shall not be liable for any loss or damage however caused by non-observance or noncompliance 

with the covenants contained in Clause 11 by BOC. 

11. COVENANTS BY BOC 

BOC hereby covenants with the Trustee for the benefit of the Debenture holders that, so long as 

any of the Debentures remain outstanding 

(a) BOC shall at all times carry on and conduct its affairs in a proper and appropriate manner. 

(b) BOC shall at all times keep such books of accounts as it is obliged to keep under the 

applicable laws and (to the extent not prohibited by law or otherwise by virtue of any duty of 

confidentiality) at any time after an event of Default shall have occurred or the Trustee shall 

have reasonable cause to substantiate that an Event of Default will occur, allow a reputed 

Audit Firm appointed by the Trustee in consultation with BOC free access to the same at all 

times during working hours and to discuss the same with the Directors and Officers of 

BOC, PROVIDED however that the Trustee and the Audit Firm shall, to the extent legally 

permitted, maintain confidentiality in respect of all the matters relating to BOC and its 

business and shall not use any information they acquire pursuant to these provisions for 

any other purpose. 

(c) BOC shall give a Certificate in writing to the Trustee within 30 days from the date of expiry 

of every bi-annual period commencing from the date of allotment of the Debentures, 

signed by a Deputy General Manager and an Assistant General Manager of BOC, certifying 

that the interest on the Debentures has been paid to the Debenture holders in terms of the 


77

Clause above. In the event BOC defaults in submitting such Certificate the Trustee shall 

treat it as an Event of Default as set out in Clause 12(a) hereof. 

(d) BOC shall at all times keep a correct Register of Debenture holders showing: 

(i) The names and addresses (which shall be the Registered Addresses of the 

Debenture holders) of all Debenture holders. 

(ii) The number, type, value and the date of issue of the Debentures held by each 

Debenture holder. 

(iii) The date on which each Debenture holder became registered as the holder of any 

Debentures and the date on which such holder ceased to be so registered. 

(e) BOC shall permit the, 

Provided however, BOC may treat the records maintained by the CDS as an 

accurate record of the details required herein above. 

(i) Trustee at all reasonable times without payment of any fee to inspect the Register 

of Debenture holders and to take copies thereof. 

(ii) Debenture holders at all reasonable times without payment of any fee to inspect 

the Register of Debenture holders pertaining to such Debenture holder and to take 

copies thereof 

(f) BOC shall forthwith upon BOC becoming aware of the happening of any and every such 

event as in mentioned in Clause 12(a) hereof give notice thereof in writing to the Trustee 

PROVIDED that BOC shall in any event issue a certificate to the Trustee within 30 days 

from the end of every bi-annual period commencing from the date of allotment of the 

Debentures signed by a Deputy General Manager and an Assistant General Manager, of 

BOC certifying that no event mentioned in paragraphs (iii) and (iv) of Clause 12(a) hereof 

has occurred during the previous Six (06) month period which would have resulted in the 

Debentures becoming payable in terms of the said Clause 12(a) . In the event BOC 

defaults in issuing such Certificates the Trustee shall treat it as an Event of Default as set 

out in Clause 12(a) hereof. 

(g) BOC shall issue to the Trustee such certificates as the Trustee may require to carry out its 

obligations in terms of these presents PROVIDED such certificates can be issued by BOC 

without committing any breach of its duty of confidentiality to any person or entity. 

(h) BOC shall reproduce the Trust Deed in full in the prospectus relating to the issue of these 

Debentures, and shall make available to any Debenture holder on request a certified copy 

of the Trust Deed upon payment of a fee of LKR 500/-. 

(i) BOC shall send to the Colombo Stock Exchange an Interim Financial Statement prepared 

on a quarterly basis, no later than forty five days from the end of the first, second and third 

quarters and two months from the end of the fourth quarter. 

(j) BOC shall send the Trustee all published financial information, which is normally provided 

to ordinary shareholders at the same time that it is sent to the shareholders. 

(k) BOC shall not without the prior written approval of the Trustee which approval shall not be 

unreasonably with held declare or pay any dividend to its shareholders during any financial 


78

year unless it has paid all the dues to the Debenture holders upon the date on which the 

dividend is proposed to be declared or paid or has made satisfactory provisions therefor. 

(l) BOC shall reimburse all reasonable expenses incurred by the Debenture holders/Trustee 

after an Event of Default has occurred in connection with: 

(i) Preservation of BOC’s assets (whether then or thereafter existing) 

(ii) Collection of amounts due under this Deed. 

All such sums shall be reimbursed by BOC within 30 days from the date of notice 

of demand from the Debenture holders or the Trustee. Provided in any event that 

BOC shall give the Trustee immediate notice upon it being aware of the occurrence 

of an Event of Default and/or if BOC becomes aware that any condition of the Trust 

Deed cannot be fulfilled and in any such event, to forward to the Trustee, as and 

when required by the Trustee, a confirmation that no Event of Default has occurred 

or is continuing. 

(m) BOC shall submit to the Trustee a certificate in writing that the principal amount has been 

paid to the Debenture Holders in accordance with the terms or conditions of the 

Debentures and provisions of the Trust Deed, immediately upon such payments become 

due. 

(n) BOC shall immediately notify the Trustee in the event that BOC becomes aware of the 

occurrence of any of the following events that has caused or could cause: 

(i) Any amount secured or payable under the Debenture to become immediately payable 

(ii) Any event in the opinion of BOC that may lead to the acceleration of either the 

payment of interest or redemption. 

(iii) Any other right or remedy under the terms and conditions of the Debentures or the 

provisions or covenants of the Trust Deed to become immediately enforceable. 

(o) BOC shall submit to the Trustee within one month after the end of every 

quarter, a certificate that BOC has complied with each and all of the covenants In the 

event BOC defaults in submitting such Certificate the Trustee shall treat it as an Event of 

Default as set out in Clause 12(a) hereof. 

The certificate should include: 

(i) Whether or not the BOC has observed and performed all the covenants and 

obligations binding upon BOC respectively pursuant to the Trust Deed 

(ii) Whether or not any limitation of liabilities or borrowing as prescribed by the BOC 

ordinance has been exceeded 

(iii) whether any material trading or capital loss has been sustained by BOC 

(iv) Whether or not any circumstances materially affecting BOC has occurred which 

adversely affect the Debentures 

(v) Whether any contingent liabilities which will materially affect the Bank to meet the 

obligations under the Debentures have occurred and if so, the extent of such 

liabilities and whether or not any contingent liability has matured or is likely to 

mature within the next twelve months, which will materially affect the ability of the 

BOC to repay the Debentures, 


79

(vi) Whether or not there has been any change in any accounting method or method 

of valuation of assets or liabilities of BOC. 

(vii) Whether or not any circumstances have arisen which render adherence to the 

existing method of valuation of assets or liabilities of BOC is Inappropriate. 

(viii) Any substantial change in the nature of BOC’s business since the issue of the 


(ix) Whether the BOC has assumed a liability of a related body Corporate during the 

quarter and details of the extent of the liability assumed during the quarter and the 

liability at the end of the quarter. 

(x) The Certificate shall be made by a Deputy General Manager and an Assistant 

General Manager of BOC and specify the date on which the certificate was made 

and in the event the BOC fails to deliver the certificate to the Trustee the Trustee 

shall inform the Debenture holders of that fact. 

(p) In the event that BOC creates a charge, BOC shall submit to the Trustee the written 

details of the charge within 21 days after it is created. If the amount to be advanced on the 

security of the charge is indeterminate, BOC shall submit to the Trustee the written details 

of the amount of each claim, within 5 market days from the date the claim is made. 

(q) BOC shall at all times maintain records of all its published information and make them 

available for inspection by the Trustee and Debenture Holders 

(r) the trustee shall be entitled to reimbursement of all reasonable costs, charges and 

expenses which the Trustee may incur in relation to the exercise of its duties hereunder 

from and out of the funds lying to the credit of the Trust hereby created. 

12 EVENTS OF DEFAULT 

(a) Subject to the provisions of Clause 12(b) below, the Debentures shall become immediately 

payable in any of the following events: 

(i) If BOC defaults the payment of principal sum or any interest due on the whole 

or any part of the Debentures in accordance with the provisions contained in 

these presents. 

(ii) If the Debentures cease to be listed in the Colombo Stock Exchange at any 

time between the time of issue and the date of Maturity, due to any default on 

the part of BOC. 

(iii) If BOC stops or threatens to stop payment of its debts or ceases to carry on its 

business, which may lead to the winding up of BOC. 

(iv) If any liquidation, bankruptcy, insolvency, receivership or similar action or 

proceeding is commenced against the BOC or an order shall be made or an 

effective Resolution shall be passed for the winding up of BOC. 

(v) If BOC does not submit a Certificate to the Trustee as set out in Clause 11 (c ) 

above certifying that the interest has been paid to the Debenture holders in 

terms of the Trust Deed. 


80

(vi) If BOC does not submit a Certificate to the Trustee as set out in Clause 11 (f) 

above certifying that no event mentioned in paragraphs (iii) and (iv) of this 

clause hereof has occurred during the previous Six (06) month period, which 

would have resulted in the Debentures becoming payable in terms of this 

Clause. 

(vii) If BOC does not submit a Certificate to the Trustee as set out in Clause 11 (o) 

above certifying that all of the covenants set out in clause 11 of the Trust Deed 

have been fully complied with. 

(viii) If BOC commits a breach of any of the other covenants or provisions herein 

contained and on its part to be observed and performed provided however that 

the Trustee shall give BOC up to 30 days notice before declaring such breach 

to be an event of default. 

(ix) Where any other indebtedness of BOC becomes due and payable prior to its 

stated maturity or where security created for any other indebtedness becomes 

enforceable. 

(x) Where there is revocation, withholding or modification of a license, 

authorization or approval that impairs or prejudices BOC’s ability to comply with 

the terms and conditions of the Debentures or the provisions of the Trust Deed 

or any other document relating to the issue, offer or invitation in respect of the 


(xi) Where any mortgage, charge, pledge, lien or any other encumbrance, present 

or future is created or assumed by BOC contrary to the terms or conditions of 

the Debentures and the provisions of the Trust Deed. 

(xii) In any of the events above, the Trustee at its discretion may, and if so 

requested in writing by the Debenture holders of at least one fifth in nominal 

value of the Debenture outstanding or if so directed by a Special Resolution of 

the holders, shall give notice to the BOC that the Debentures become 

immediately due and payable at their principal amount, together with accrued 

interest as provided in the Trust Deed. 

(b) Repayment before the maturity of the principal sum on the Debentures or any part thereof 

in any circumstance shall be subject to the prior approval of the Debenture holders of 3/4 th 

of the face value of the Debentures outstanding at that time and the prior written consent of 

the Central Bank of Sri Lanka. 

13. ENFORCEMENT OF OBLIGATIONS 

At any time after the Debentures shall have become repayable on maturity or otherwise under any 

provision of these Presents, the trustee may at its discretion, or upon the request in writing of the 

Debenture holders of at least one fifth (1/5) of the face value of the Debentures outstanding, and in 

the event that there is no Trustee, the Debenture holder s pursuant to an Extra Ordinary 

Resolution and without any further notice, may institute such proceedings as they think fit to 

enforce repayment obligations of BOC under these Presents. 

Provided that nothing in these Presents shall preclude a Debenture holder from initiating legal 

action on his own right. 


81

14. APPLICATION OF MONIES RECEIVED BY THE TRUSTEE 

In the event of the Trustee recovering or receiving any monies from BOC consequent to any action 

taken by the Trustee against BOC the Trustee shall apply such monies, 

(a) In the first place in paying or providing for the payment or satisfaction of the costs charges 

expenses and liabilities incurred in or about the execution of the trust constituted by these 

presents (including remuneration of the Trustee) 

(b) Secondly, in or towards payment to the Debenture holders of all arrears of interest 

remaining unpaid on the Debentures held by them respectively. 

(c) Thirdly in or towards payment to the debenture holders of all principal monies due in 

respect of the Debentures held by them respectively and 

(d) Finally, the Trustee shall pay the surplus (if any) of such monies to BOC or its assigns, 

PROVIDED that at the discretion of the Trustee payments may be made on account of 

principal monies before any part of the interest or the whole of the interest on the 

Debentures have been paid but such alteration in the order of payment of the principal 

monies and interest shall not prejudice the right of the Debenture holder to receive the full 

amount to which they would have been entitled if the ordinary order of payment had been 

observed. Any payment to the Debenture holders under this clause shall be made pari 

passu in proportion to the Debentures held by them respectively. 

15. MANNER OF PAYMENT & ENFORCEMENT OF DEBENTURES 

Any payment to be made in respect of the Debentures by BOC or the Trustee may be made in the 

manner provided in this trust Deed and any payments so made shall be good discharge pro tanto to 

BOC or the Trustee, as the case may be. Any payment of interest in respect of a Debenture shall 

extinguish any claim which may arise directly or indirectly in respect of such interest from a 

Debenture holder. 

Upon any payment under the provisions of Clause 14 the Debentures in respect of which such 

payment is made in full shall be produced to the Trustee through whom such payment is made and 

BOC shall call such Debentures to be cancelled and shall certify or procure the certification of such 

cancellation. 

16. REMUNERATION OF THE TRUSTEE 

BOC shall pay the Trustee during the continuation of these presents a sum of Sri Lankan Rupees 

Three Hundred Thousand (LKR 300,000/-) per annum plus the applicable Government Taxes on 

account of remuneration for the Trustee for its services under these presents. The said fee shall be 

paid at the expiry of every one (01) year period commencing from the date of allotment of the 


Further, the trustee shall be entitled to reimbursement of all reasonable costs, charges and 

expenses which the Trustee may incur in relation to the exercise of its duties hereunder from and 

out of the funds lying to the credit of the Trust hereby created. 

17. POWERS AND DUTIES OF THE TRUSTEE 

Without prejudice to the powers and reliefs conferred on Trustees by general law by these presents 

or by the laws relating to the Trusts the trustee shall have the following powers:- 

(a) The Trustee is duly qualified to act as the Trustee 


82

(b) The Trustee may in relation to these presents act on the opinion or advice of or a 

certificate or any information obtained from any lawyer, banker, valuer, surveyor, broker, 

auctioneer, auditor, accountant or other expert (whether obtained by the Trustee or BOC) 

and shall not be responsible for any loss occasioned by acting on any such opinion, advice, 

certificate or information and that the Trustee shall not be liable for acting on any opinion, 

advice, certificate or information purporting to be so conveyed although the same shall 

contain some error as long as the Trustee has acted in good faith, if it has reasonable 

grounds for believing that such auditor of officer was competent to give or make such 

certificate, report or statement. 

(c) The Trustee shall as regards all the trusts, powers authorities and discretion vested in it by 

these presents or by operation of law, have absolute and uncontrolled discretion as to the 

exercise or non-exercise thereof and the Trustee shall not be responsible for any loss, 

costs, damages, expenses or inconvenience that may result from the exercise or non 

exercise thereof but whether the Trustee is under the provisions of these presents bound to 

act at the request or direction of the Debenture holders the Trustee shall nevertheless not 

be bound unless first indemnified to its satisfaction against all actions, proceedings, claims 

and demands to which it may render itself liable and all costs, charges, damages, 

expenses and liabilities which it may incur by so doing. However nothing in this Clause 

shall preclude a Debenture holder from filing action on his own if he so wishes; 

(d) To summon any meeting of the debenture holders in accordance with the provisions of 

Clause 21 hereof. 

(e) Where an event of default has occurred and is continuing to occur, the Trustee shall 

exercise such right and powers vested in it by the Trust Deed and use a reasonable degree 

of skill and diligence in exercising such powers 

(f) In case of default by BOC, the Trustee may but shall not be bound unless directed either by 

an instrument in writing signed by the Debenture holders of at least Seventy Five per 

centum (75%) of the face value of the Debentures for the time being outstanding or in 

accordance with a Special Resolution passed by the debenture holders in accordance 

with Clause 21 of these presents, to waive such terms and conditions as they shall deem 

expedient any of the covenants and provisions contained in these the part of BOC to be 

performed and observed. 

(g) The Trustee as between itself and the Debenture holders shall have full power to determine 

all questions and doubts arising in relation to any of the provisions of these presents and 

every such determination, whether made upon a question actually raised or implied in the 

acts or proceedings of the Trustee. If a debenture holder is not satisfied with the said 

determination provided by the Trustee then the Debenture holder may challenge such 

determination in a court of law. 

PROVIDED 

Such debenture holder has the written consent of the debenture holders of at least Ten 

per centum (10%) of the face value of Debentures for the time being outstanding. 

Such application to Court of law is instituted within Thirty (30) days of notification of 

such determination to the Debenture holders. 

(h) Trustee is not liable for anything done or omitted to be done in accordance with a direction 

given to the Trustee by the Debenture holders at any meeting called 

(i) The Trustee may, in the conduct of the trusts of these presents, instead of acting through 

its staff, employ and pay a professional person, to transact or conduct, or concur in 

transacting or conducting, any business and to do or concur in doing all acts required to be 

done by the Trustee. 


83

(j) The Trustee shall not be liable to BOC or any debenture holder by reason of having 

recognized or treated as a Debenture holder any person subsequently found not to be so 

entitled to be recognized or treated: 

(k) Whenever in these presents the Trustee is required in connection with any exercise of its 

powers, trusts, authorities or discretions to have regard to the interests of the Debenture 

holders, it shall have regard to the interests of the Debenture holders as a class and in 

particular, but without prejudice to the generality of the foregoing, shall not be obliged to 

have regard to the consequences of such exercise for any individual Debenture holders 

resulting from his or its being for any purpose domiciled or resident in, or otherwise 

connected with, or subject to the jurisdiction of, any particular territory, and 

(l) The Trustee may, accept a certificate signed by A Deputy General Manager and an 

Assistant General Manager of BOC certifying that all Debentures have been redeemed or 

relating to any other matter primarily in the knowledge of BOC as sufficient evidence 

thereof and such Certificate shall be a complete protection to the Trustee who acts thereon. 

(m) The Trustee shall give notice in writing to the Debenture holders as and when the Trustee is 

notified by BOC of any occurrence mentioned in Clause 12(a) or any condition of the Trust 

Deed which cannot be fulfilled. 

PROVIDED nevertheless that none of the provisions of these presents shall in any case in 

which the Trustee has failed to show the degree of care and diligence required by it, having 

regard to the provisions of these presents, conferring on the Trustee the powers, authorities 

or discretions, relieve or indemnify the Trustee against any liabilities which by virtue of any 

rule of law would otherwise attach to it in respect of any negligence , default , breach of 

duty or breach of trust of which it may be guilty in relation to its duties under these 

presents. 

PROVIDED FURTHER that it shall exercise reasonable diligence to ascertain whether the 

BOC has committed any breach of the terms and conditions of the Debentures or 

provisions of the Trust Deed or whether an event of default has occurred or is continuing to 

occur, on perusal of the documents submitted in terms of the covenants set out in the Trust 

Deed. 

The Trustee’s role shall be passive prior to the Trustee being notified of any occurrence of 

an Event of Default and the Trustee shall not have any other duty apart from those 

expressly stated herein. 

For the avoidance of doubt, the Trustee shall not be considered, nor have any responsibility 

or liability, as a lender or borrower. The obligation to repay any debts owing to Debenture 

holders shall remain with the BOC and the Trustee shall not be liable nor responsible for 

any act, omission or default of the BOC nor any other party. The Trustee shall also not be 

liable for any loss due to any cause beyond its control, nor to take any action in relation to 

any event of default, which it is not aware of, nor for consequential or indirect loss, nor for 

market loss, risk or movement affecting any investments. The BOC shall fully indemnify the 

Trustee for any liability, claim, expense, damage or loss that the Trustee may incur in 

connection with this Trust Deed, save where such liability or loss is due solely to the 

negligence or willful misconduct of the Trustee. The Trustee shall be entitled to rely and act 

on any document or instrument which it has received from BOC and to treat it as authentic 

and authorized unless the Trustee has actual notice otherwise. In performing its duties, the 

Trustee shall maintain the confidentiality of confidential information received by it, but the 

Trustee may disclose any such information to a branch, head office, subsidiary or agent of 

the Trustee on a need to know basis in connection with this Trust Deed, to any government 

body or court and/or to any party in accordance with the requirement of a law, regulatory 

directive or regulation. 


84

(n) The Trustee shall ensure that all documents required to be submitted by BOC in terms of the 

covenants set out in the Trust Deed are forwarded in a timely manner. 

EXEMPTIONS AND INDEMNIFICATIONS OF TRUSTEE FROM LIABILITY 

Terms and conditions of the Debentures and provisons in the Trust Deed or a term of a contract 

with the Debenture Holdsers secured by the Trust Deed, shall be void in so far as the term or 

provision would have the effect of indemnifying the Trustee against that liablility, unless the 

term or provision: 

releases the Trustee from liability for something done or omitted to be done before the 

release is given; or 

enables a meeting of debenture holders to approve the release of the Trustee from 

liability for something done or omitted to be done before the release is given. 

Such release will be effective when approved by Debenture holders if the Debenture holders 

who vote for the resolution represent 75% of the nominal value of the Debentures 

18 APPOINTMENT AND REMOVAL OF THE TRUSTEE 

(a) Subject to the provisions of this Trust Deed, the power of appointing new trustees shall be 

vested in BOC, provided further that BOC shall obtain the approval of Debenture Holders 

holding not less than ten per centum (10%) of the nominal value of the Debentures for the time 

being outstanding prior to the appointment of the new trustee. Notice of such appointment shall 

be given to the Debenture Holders within thirty (30) days of such appointment by an 

advertisement published in national newspapers in all three languages (Sinhala, Tamil and 

English) of BOC’s choice circulating in Sri Lanka. 

(b) In the event BOC does not or cannot exercise its power to appoint a new trustee and there 

being no new trustee appointed as of thirty (30) days before the removal/retirement of the 

Trustee taking effect in accordance with the terms hereof, the Debenture Holders of not less 

than 20% of the nominal value of the Debentures in issue may convene a meeting to appoint a 

new trustee by an ordinary resolution. 

(c) Any removal of a Trustee and the subsequent appointment of a replacement Trustee by the 

BOC shall be with the consent of 75% majority of Debenture Holders. 

(d) In the event of the Debenture Holders not being satisfied with the Trustee, they have the right to 

remove the Trustee by way of a special resolution passed at a General Meeting convened 

under Clause 21 hereof. 

(e) BOC shall be notified of any removal of the Trustee and subsequent appointment of a 

replacement Trustee by the Debenture holders. 

(f) BOC shall take reasonable steps to replace the Trustee as soon as practicable after 

becoming aware that: 

(i) The Trustee has ceased to exist 

(ii) The Trustee is in the situation of conflict of interests 

(iii) The Trustee has ceased to perform its function as a Trustee 


85

(iv) The Trustee is in the situation of unsuitability and does not eliminate such situation 

within 90 days, after them ascertaining or of them been informed that the Trustee has 

such situation. 

(g) In the event the Trustee discovers that it is not eligible to be appointed or act as Trustee, the 

Trustee shall give notice in writing to BOC regarding the same. 

19 COMPLIANCE OF MAJORITY OF TRUSTEES 

If there be more than one Trustee under these presents the Trustees shall with majority consent 

exercise all or any of the trust’s powers and discretions vested in the Trustees generally under any 

Clause of these presents. 

20 RETIREMENT OF TRUSTEE 

In the event of the Trustee, in its sole and absolute discretion, desiring to retire, the Trustee shall 

give not less than 90 days notice to BOC in writing to that effect, and BOC shall thereupon appoint 

a new Trustee in accordance with Clause 18 of these presents. The Trustee shall continue in its 

capacity as Trustee until such time a new Trustee is appointed. 

In the event of such a retirement, the Trustee at its cost shall publish a notice to this effect in 

Newspapers in all three languages (Sinhala, Tamil and English) of its choice circulating in Sri Lanka 

and such notice shall be deemed to be sufficient notice to the Debenture holders notwithstanding 

anything to the contrary herein contained. 

21 MEETINGS OF DEBENTURE HOLDERS 

(a) The Trustee shall call a meeting/cause a meeting to be called of Debenture holders with 

notice to BOC and all Debenture holders on a requisition being received in writing signed 

by the Debenture holder (s) of at least 1/5 th of the face value of the Debentures for the time 

being outstanding or if requested by BOC. 

Furthermore, BOC is entitled to convene a meeting with the consent of at least one-tenth in 

nominal value of the Debentures outstanding. 

(b) Not less than 21 days notice shall be given of a meeting for the purpose of passing a 

Resolution. 

(c) The quorum for the meeting (other than adjourned meeting) for the purpose of passing a 

Special Resolution shall be the Debenture holders representing 10% of the face value of 

the Debentures for the time being outstanding, provided however, that the quorum for 

passing an Extraordinary Resolution should be the holders of a clear majority in face 

value of the outstanding Debentures present in person or by proxy or by attorney. 

(d) If such a quorum cannot be obtained, such meeting shall be adjourned for not less than 

fourteen (14) days in which event notice of adjourned meeting shall be sent to every 

Debenture holder and shall state in such notice that if a quorum as above defined shall not 

be present at the adjourned meeting the Debenture holders then present shall form a 

quorum. 

(e) The necessary majority for passing a Special Resolution shall not be less than 3/4ths of 

the persons voting thereat on a show of hands and if a poll is demanded then not less than 

3/4ths of the votes given on such poll. 

(f) On a poll, each debenture holder will be entitled to one vote for each unit of Debenture held 

by such person. 


86

(g) A proxy need not be a holder of the Debentures. 

(h) The Trustee shall be the chairman of any meeting of the Debenture 

holders and shall appoint a person or body to act as a Secretary of such meeting and a 

copy of a resolution certified by the Trustee and such Secretary shall deem to be 

conclusive evidence that such Resolution has been duly adopted. 

(i) In the event BOC fails to remedy any breach of terms and conditions of 

the Debentures or the provisions/covenants of the Trust Deed, the 

Trustee shall: 

Call a meeting of the Debenture Holders with notice to BOC 

Inform the Debenture Holders of the failure at the meeting; and 

Submit proposals for the protection of the Debenture holder’s interests or call for 

proposals from the Debenture Holders at the meeting, as the Trustee considers 

necessary or appropriate and obtain the directions 

22 MODIFICATION OF THE TRUST DEED 

The Trustee and BOC may modify by mutual agreement to these presents provided such 

modifications are of a routine nature and not detrimental to the interests of the Debenture holders. 

Provided however that any modification to these presents shall only be made with the consent of 

the Debenture holders of at least 3/4ths of the face value of the Debentures for the time being 

outstanding. 

23 NOTICES 

Any notice or demand to BOC, Debenture holder(s) or the Trustee required to be given, made or 

served for any purpose hereof shall be given, made or served by sending the same by prepaid 

registered post in the case of BOC or Trustee and by prepaid ordinary mail in the case of 

Debenture holder(s), telegrams, cablegrams, telex or by facsimile transmission or by delivering it by 

hand to BOC. Debenture holders or the Trustee as the case may be, in the case of BOC or the 

Trustee at the address shown in this Deed and in the case of Debenture holder(s) to the address 

which is recorded in CDS for the purpose of this Clause, and any notice sent by post as provided in 

this Clause shall be deemed to have been given, made or served 72 hours after dispatch and any 

notice sent by telegrams, cablegrams, telex or by facsimile transmission as provided in the clause 

shall be deemed to have been given, made or served at the time of dispatch and in proving the 

giving, making or service of the same it shall be sufficient to prove, in the case of a letter, that such 

letter was properly stamped, addressed and placed in the post and, in the case of a telegrams, 

cablegrams, telex or by facsimile transmission that such telegrams, cablegrams, telex or by 

facsimile transmission was duly dispatched and received in the readable and understandable 

condition. 

The Trustee shall at any time be entitled to give notice of any meeting or make any communication 

to the Debenture holders by notice published in Newspapers in all three languages (Sinhala, Tamil 

and English) of its choice circulating in Sri Lanka and such notice will notwithstanding anything to 

the contrary herein contained be deemed to be sufficient notice to the Debenture holders including 

the provisions of the above clause. 

24 MISCELLANEOUS 

(a) Nothing in the provisions of these presents shall require disclosure to the Trustee by BOC 

of any information as to the affairs of any of its customers except, 

(i) when required to do so by a Court of Law, or 


87

(ii) in order to comply with any of the provisions of any Law. 

PROVIDED however that BOC shall be obliged to furnish to the Audit Firm referred to in 

the clause 11(b) information in respect of BOC’s books of accounts. 

(b) In the event of any inconsistency between these provisions and any rules, regulations or 

directions of the Securities & Exchange Commission of Sri Lanka, or the Colombo Stock 

Exchange such rules, regulations or directions shall prevail. 

IN WITNESS WHEREOF the authorized signatures of the Bank of Ceylon and Deutsche Bank AG, 

Colombo Branch have set their hands hereunto and to three others of the same tenor and date as these 

presents at Colombo on the day herein before mentioned. 

Signed for and on behalf of the Bank of Ceylon 

By its duly authorized representatives 

Pitumpe Appuhamilage Lionel 

(Deputy General Manager – 

Investments & Human Resources) 

Hettiarachige Sunil Jayawardana 

(Asst General Manager-Investment Operations) 

of the Bank of Ceylon 

Witnesses: 

1. Sgd 

2. Sgd 

Signed for and on behalf of the 

Deutsche Bank AG Colombo Branch 

By its duly authorized representatives 

and attorneys Sellapperumage Ruwanthi Prisca Shirlene Fernando and Tyronne Hannan 

of the said Deutsche Bank AG, Colombo branch 

Witnesses: 

1. Sgd 

2. Sgd 


88


89 

Annexure III


90

BOC BRANCH NETWORK 

CENTRAL PROVINCE 

Alawathugoda 066-2242327 

Dambulla 066-2285270 

Digana 081-2376928 

Galagedara 081-2461214 

Galaha 081-2467213 

Galewala 066-2289262 

Gampola 081-2350108 

Gelioya 081-2310214 

Hatton 051-2222015 

Kandapola 052-2229636 

Kandy 081-2223697 

Kandy 2nd 081-2234292 

Katugastota 081-4471640 

Madawala 081-2476214 

Maskeliya 052-2277280 

Matale 066-2222262 

Naula 066-2246280 

Nawalapitiya 054-2222233 

Nuwara Eliya 052-2224047 

Padiyapelella 052-2287035 

Pallepola 066-2247272 

Peradeniya 081-4475283 

Pilimatalawa 081-5740197 

Pundaluoya 051-2233205 

Pussellawa 081-2478664 

Rattota 066-2255280 

Rikillagaskada 081-2365314 

Talatuoya 081-2404334 

Talawakelle 052-2258280 

Teldeniya 081-2376280 

Udadumbara 081-2402317 

Walapana 052-2279180 

Wattegama 081-2475838 

Yatawatta 066-2221084 

EASTERN PROVINCE 

Akkaraipattu 067-2279242 

Ampara 063-2222981 

Batticaloa 065-2227410 

Chenkalady 065-2240492 

Hingurana 063-2240037 

Kalmunai 067-2229340 

Kaluwanchikudy 065-2250012 

Kantale 026-2234361 

Kattankudy 065-2246613 

Kinniya 026-2236270 

Muttur 026-2238327 

Nintavur 067-2250039 

Pottuvil 063-2248021 

Sammanthurai 067-2260054 

Trincomalee 026-2223084 

Trincomalee Bazaar 026-2223880 


91 

Annexure IV 

Valachchenai 065-2257708 

NORTH CENTRAL PROVINCE 

Anuradhapura 025-2222715 

Anuradhapura Bazaar 025-2222160 

Anuradhapura N'Town 025-2223685 

Aralaganwila 066-2279257 

Bakamoona 066-2256680 

Dehiattahandiya 027-2250287 

Eppawala 025-2249180 

Galenbindunuwewa 025-2258280 

Galkiriyagama 025-2263062 

Galnewa 025-2269580 

Hingurakgoda 027-2247642 

Horawpothana 025-2278416 

Ipalogama 025-2264279 

Jayanthipura 027-2222266 

Kaduruwela 027-2222416 

Kahatagasdigiliya 025-2247480 

Kebithigollawa 025-2298680 

Kekirawa 025-2264280 

Madatugama 025-2264283 

Medawachchiya 025-2245683 

Medirigiriya 027-2248337 

Meegalewa 060-2855054 

Mihintale 025-2266503 

Nochchiyagama 025-2257880 

Padavi Parakramapura 025-2254018 

Pemaduwa 025-2223307 

Polonnaruwa New Town 027-2223009 

Rambewa 025-2066555 

Sewagama 027-2222585 

Thambuttegama 025-2276280 

Tirappana 025-2223352 

NORTHERN PROVINCE 

Atchuvely 021-2263402 

Chavakachcheri 021-2227396 

Chunnakam 021-2214228 

Jaffna 021-2224018 

Jaffna 2nd 021-2226033 

Kankesanthurai 060-2212176 

Karainagar 021-2228278 

Kayts 021-2225274 

Kilinochchi 024-3248004 

Kopai 021-2230084 

Manipay 021-2255188 

Mankulam 071-2348783 

Mannar 023-2232337 

Mullaitivu 021-2228941 

Nelliady 021-2263260 

Point Pedro 021-2263570 

Thirunelveli 021-2223948 

Vavuniya 024-2222141

NORTH WESTERN PROVINCE 

Alawwa 037-2278180 

Anamaduwa 032-2263280 

Bingiriya 032-2246107 

Chilaw 032-2223401 

Dankotuwa 031-2258180 

Dummalsuriya 032-2240690 

Galgamuwa 037-2253080 

Giriulla 037-2288080 

Hettipola 037-2291080 

Hiripitiya 037-2264080 

Ibbagamuwa 037-2259970 

Kalpitiya 032-2260702 

Kobeigana 037-2293101 

Kuliyapitiya 037-2281280 

Kurunegala 037-2233880 

Kurunegala 2nd 037-2222115 

Madampe 032-2247680 

Madurankuliya 032-2268003 

Maho 037-2275280 

Mawathagama 037-2299259 

Melsiripura 037-2250165 

Narammala 037-2248771 

Nattandiya 032-2254280 

Nikaweratiya 037-2260280 

Norochcholei 032-2268555 

Pannala 037-2246080 

Polgahawela 037-2243280 

Pothuhera 037-2237619 

Polpitigama 037-2273103 

Puttalam 032-2265209 

Ridigama 037-2252080 

Waikkal 031-2277280 

Wariyapola 037-2267348 

Welpalla 031-5677766 

Wennappuwa 031-2255280 

SABARAGAMUWA PROVINCE 

Aranayake 035-2258016 

Avissawella 036-2222099 

Ayagama 045-2250080 

Balangoda 045-2288390 

Dehiowita 036-2222580 

Deraniyagala 036-2249280 

Eheliyagoda 036-2259571 

Embilipitiya 047-2230980 

Hemmathagama 035-2257280 

Kahawatta 045-2270180 

Kalawana 045-2255280 

Kegalle 035-2230600 

Kegalle Bazaar 035-2222550 

Kuruwita 045-2262581 

Mawanella 035-2247915 

Nivitigala 045-2279280 

Pelmadulla 045-2274380 

Rakwana 045-2246280 

Rambukkana 035-2265280 


92 

Ratnapura 045-2222100 

Ratnapura Bazaar 045-2222710 

Ruwanwella 036-2268005 

Warakapola 035-2267258 

Yatiyantota 036-2271280 

SOUTHERN PROVINCE 

Ahungalla 091-2264107 

Akuressa 041-2283280 

Ambalangoda 091-2256307 

Ambalantota 047-2223280 

Angunakolapellasa 047-2229120 

Baddegama 091-2292280 

Batapola 091-2260405 

Beliatta 047-2243274 

Bentota 034-2275283 

Deiyandara 041-2268598 

Deniyaya 041-2273870 

Devinuwara 041-2222247 

Dickwella 041-2255280 

Elpitiya 091-2291280 

Galle 091-2232269 

Galle Bazaar 091-2234478 

Hakmana 041-2286280 

Hambantota 047-2220180 

Hikkakaduwa 091-2277813 

Imaduwa 091-2286030 

Kamburupitiya 041-2292213 

Kataragama 047-2235280 

Koggala 091-2283380 

Matara 041-2229280 

Matara Bazaar 041-2223920 

Middeniya 047-2247280 

Neluwa 091-2237530 

Pitigala 091-2291205 

Ruhunu Campus 041-2222681 

Talgaswela 091-2296480 

Tangalle 047-2240280 

Tawalama 091-2224459 

Tissamaharama 047-2237280 

Urubokka 041-2272280 

Walasmulla 047-2245280 

Weeraketiya 047-2246280 

Weligama 041-2250280 

Yakkalamulla 091-2286080 

UVA PROVINCE 

Badalkumubura 055-2250279 

Badulla 055-2222980 

Balleketuwa 055-2285160 

Bandarawela 057-2230014 

Bibile 055-2265480 

Buttala 055-2273980 

Diyatalawa 057-2229092 

Ettampitiya 055-2294080 

Girandurukotte 027-2254380 

Haldumulla 057-2268271 

Haputale 057-2268080 

Hali-Ella 055-2295080

Koslanda 057-2257780 

Lunugala 055-2263980 

Lunuwatta 057-2232742 

Mahiyangana 055-2258195 

Medagama 055-2265580 

Meegahakiwula 055-2245707 

Moneragala 055-2276180 

Padiyatalawa 063-2246003 

Passara 055-2288280 

Siyambalanduwa 072-2243900 

Thanamalwila 047-2234080 

Uva – Paranagama 057-2246010 

Welimada 057-2245984 

Wellawaya 055-2274880 

WESTERN PROVINCE NORTH 

Andiambalama 011-2258184 

Biyagama 011-5558970 

Borella 011-4612617 

Borella 2nd 011-2685140 

Central Bus Stand 011-5365118 

Central Super Market 011-2446475 

City Office 011-2329413 

Dematagoda 011-5335594 

Divulupitiya 031-2246280 

Fifth City 011-2449646 

Gampaha 033-2226051 

Grandpass 011-2448202 

Hulftsdorp 011-2424843 

Ja-Ela 011-5342311 

Kadawatha 011-2920687 

2 nd City Kadawatha 011-2922195 

Kandana 011-2232398 

Katunayake IPZ 011-2259583 

Kiribathgoda 011-2911304 

Kirindiwela 033-2267280 

Kolonnawa 011-5557286 

Kotahena 011-2448632 

Lake House 011-5363723 

Lake View 011-5359693 

Main Street 011-2447198 

Maradana 011-2689403 

Minuwangoda 011-2295214 

Mirigama 033-2275975 

Narahenpita 011-2368514 

Negombo 031-2224711 

Negombo Bazaar 031-2231297 

Nittambuwa 033-2287280 

Peliyagoda 011-2945078 

Personal 011-2446821 

Pugoda 011-2404821 

Ragama 011-2960291 

Regent Street 011-2697035 

Seeduwa 011-2259590 

Veyangoda 033-2287279 

Wattala 011-5368394 

Welisara 011-2958485 

Yakkala 033-2233591 


93 

WESTERN PROVINCE SOUTH 

Agalawatta 034-2247480 

Aluthgama 034-2271413 

Athurugiriya 011-2561378 

Bambalapitiya 011-5368439 

Bandaragama 038-2290280 

Battaramulla 011-2862575 

Beruwala 034-2279899 

Bulathsinhala 034-2283116 

Dehiwala 011-2738335 

Dharga Town 034-2275411 

Dodangoda 034-2281628 

Hanwella 036-2253520 

Homagama 011-2855059 

Horana 034-2260152 

Hyde Park 011-2687483 

Independent Square 011-2678073 

Ingiriya 034-2269280 

Kaduwela 011-2537999 

Kalutura 034-2229804 

Katubedde 011-2625438 

Kollupitiya 011-4795036 

Kollupitiya 2nd 011-2574581 

Kottawa 011-2783313 

Maharagama 011-2746146 

Malabe 011-2760753 

Matugama 034-2243590 

Milagiriya 011-2504627 

Moratuwa 011-2646165 

Mount Lavinia 011-2721060 

Nugegoda 011-2821287 

Padukka 011-2859112 

Panadura 038-2243323 

Panadura Bazaar 038-2243324 

Parliament 011-2777309 

Pelawatta 011-2785550 

Piliyandala 011-2614165 

Rajagiriya 011-5368641 

Ratmalana 011-2719735 

Thimbirigasyaya 011-2594538 

Union Place 011-2314757 

Visakha 011-2556226 

Wadduwa 038-2232538 

Wellawatta 011-2588941 

CORPORATE BRANCHES 

Corporate 011-2345428 

Corporate 2 nd 011-2394584 

Metropolitan 011-2329419 

Pettah 011-2393544 

Taprobane 011-2422267 

Off Shore Banking Unit 011-2389122 

OVERSEAS BRANCHES 

Chennai 009144-26423501 

009144-26420972 

Male 00960-3323045 

00960-3323046

MEMBERS AND TRADING MEMBERS OF THE COLOMBO STOCK EXCHANGE 

MEMBERS – DEBT & EQUITY 


94 

Annexure V 

Bartleet Religare Securities (Pvt) Ltd., Level “G”, “Bartleet House” 65, Braybrooke Place, Colombo 2. 

Tel.5220200, Fax: 2434985 E-mail: info@bartleetstock.com Kandy Branch Tel: 081-5622779, 081-5622781, 

Matara Branch Tel: 041-5410005-6, 041-2232985, Negombo Branch Tel: 031-5677838, 031-2221550, Jaffna 

Branch Tel: 021-2221800, 

Acuity Stockbrokers (Pvt) Ltd., Level 6, Acuity House, 53, Dharmapala Mawatha, Colombo 3. Tel.2206206 

Fax: 2206298/9 E-mail: sales@acuitystockbrokers.com, Kandy Branch Tel: 081-2205609, 081-2203623, Fax: 

081-4470257 

John Keells Stockbrokers (Pvt) Ltd., 130, Glennie Street, Colombo 2. Tel. 2306250, 2342066-7, 2446694- 

5, 2338066-7, 2439047-8, 4710721-4 Fax: 2342068, 2326863 E-mail: jkstock@keells.com, website: 

www.jksb.com, www.jksbonline.com, www.jksb.keells.lk 

Asha Phillip Securities Ltd., Level 4, “Millennium House”, 46/58, Navam Mawatha, Colombo 2. Tel. 

2429100, Fax: 2429199 E-mail: apsl@ashaphillip.net, Matara Branch Tel: 041-2223240, 041-2223940, 

Kandy Branch Tel: 081-4474118, 081-2204750, Kurunegala Branch Tel: 037-4691844, Fax: 037-2234777, 

Negombo Branch Tel: 031-2227474, Fax: 031-2227474, Jaffna Branch Tel: 021-2221614 

Assetline Securities (Pvt) Ltd., 282, Kaduwela Road, Battaramulla. Tel. 4700111, 2307366 Fax: 4700112 

website: www.dpgsonline.com E-mail: dpgs1@sltnet.lk Matara Branch Tel: 041-4390766-7 Kandy Branch 

Tel: 081-4481638/9, 081-4474233, Fax: 081-2202104, Kurunegala Branch Tel: 037-4690384, 037-2222808, 

Fax: 037-4690095 

Somerville Stockbrokers (Pvt) Ltd., 137, Vauxhall Street, Colombo 2. Tel. 2329201-5, 2332827, 2338292-3 

Fax: 2338291, E-Mail: ssb-web@sltnet.lk 

J B Securities (Pvt) Ltd., 150, St. Joseph Street, Colombo 14. Tel. 2490900, 077-2490900, 077-2490901 

Fax: 2430070, 2446085, 2447875 E-mail: jbs@jb.lk 

Lanka Securities (Pvt) Ltd., 228/2, Galle Road, Colombo 4. Tel. 4706757, 2554942 Fax: 4706767 website: 

www.lsl.lk E-mail: lankasec@sltnet.lk Kandy Branch Tel: 081-4939206, Fax: 081-4481772, Kurunegala 

Branch Tel: 037-4934067, Fax: 037-4692105,Negombo Branch Tel: 031-4929671, Fax: 031-4874736, Jaffna 

Branch Tel: 021-4590460, 021-4925148, Fax: 021-4590460 

Asia Securities (Pvt) Ltd., Level 21, West Tower, World Trade Centre, Echelon Square, Colombo 1. Tel. 

2423905, 5320000 Fax: 2336018 E-mail: enquiry@asiacapital.lk, Kurunegala Branch Tel. 0375642717, 

0375628844,0375643580 

Nation Lanka Equities (Pvt) Ltd., Ceylinco House, Level 9, 69, Janadhipathi Mawatha, Colombo 1. Tel. 4- 

714300, 4-714388, 4-714389, 0777-891871, 0777-896064 Fax: 2387228 E-mail: info@ecsbl.com, web site: 

www.ecsbl.com, Kurunegala Branch Tel: 037-2220297, 037-2234633 Fax: 037-2234634 Kandy Branch, 

127A-2/1 CDC Complex D.S. Senanayake Veediya, Kandy. 

Capital TRUST Securities (Pvt) Ltd., 42, Sir Mohamed Macan Markar Mawatha, Colombo 3. Tel: 5-335225, 

Fax: 5-365725 E-mail: inquiries@capitaltrust.lk, website: www.capitaltrust.lk. Kandy Branch Tel: 081- 

5626839, Fax: 081-5675423, Kurunegala Branch Tel: 037-5671403, 037-5677939, Fax: 037-5264264, 

Matara Branch Tel: 041-5623200, 041-5623202, Negombo Branch Tel: 031-5675291-4, Fax: 031-2227894, 

Jaffna Branch Tel: 021-5677001-2, Fax: 021-2220347 

S C Securities (Pvt) Ltd., 2nd Floor, 55 D.R. Wijewardena Mawatha, Colombo 10. Tel. 4711000, Fax: 

2394405 E-mail: cscres@sltnet.lk Matara Branch Tel: 041-2220090, 041-4390545, Kandy Branch Tel: 081- 

4474299 

CT Smith Stockbrokers (Pvt) Ltd., 4-14, Majestic City, 10, Station Road, Colombo 4. Tel. 2552290 -4 Fax: 

2552289 E-mail: ctssales@sltnet.lk

D N H Financial (Pvt) Ltd., Level 16, West Tower, World Trade Centre, Colombo 1. Tel. 5700777 Fax: 

5736264, E-mail: info@dnhfinancial.com, Negombo Branch Tel: 031-5676451 

N D B Stockbrokers (Pvt) Ltd., 5th Floor, NDB Building, 40, Navam Mawatha, Colombo 2. Tel. 2314170-8 

Fax: 2314180, E-mail: mail@ndbs.lk 

TRADING MEMBERS – DEBT & EQUITY 

Capital Alliance Securities (Pvt) Ltd., Level 5, “Millennium House”, 46/58 Navam Mawatha, Colombo 2. 

Tel: 2317777 Fax: 2317788, Matara Branch Tel: 041-4390610, 041-2220085, Negombo Branch Tel: 031- 

2227843-4, Fax: 031-2227844, Kurunegala Branch Tel: 037-2222034-5, Fax: 037-2222034 

SMB Securities (Pvt) Ltd., 47, Dharmapala Mawatha, Colombo 3. Tel: 5232091 Fax: 2339292 E-mail: 

admin@smbsecurities.lk Jaffna Branch Tel: 071-8736499 

First Guardian Equities (Pvt) Ltd., 32nd Floor, East Tower, World Trade Centre, Colombo 1. Tel: 5884400 

Fax: 5884401,E-mail: info@firstguardianequities.com 

Taprobane Securities (Pvt) Ltd., 2nd Floor, 10, Gothami Road, Colombo 08. Tel: 5328200 Fax: 5328277 

E-mail: info@taprobane.lk, dinal@taprobane.lk, web site: www.taprobanestocks.com 

Heraymila Securities Ltd., Level 8, South Wing, Millennium House, 46/58, Navam Mawatha, Colombo 2. 

Tel: 2359100, Fax: 2305522 E-mail:info-hsl@heraymila.com 

SKM Lanka Holdings (Pvt) Ltd., 377/3, Galle Road, Colombo 3. Tel: 2372413-4, Fax: 2372416, Jaffna 

Branch Tel: 021-2221596 E-mail:info@skmlankaholdings.com 

IIFL Securities Ceylon (Pvt) Ltd., 27th Floor, East Tower, World Trade Centre, Colombo 1. Tel: 2333000 

Fax: 2333383 Email: info.ceylon@iiflcap.com 

TKS Securities (Pvt) Ltd, 19-01, East Tower, World Trade Centre, Colombo 1. Tel: 7857799, Fax: 7857857, 

Email: ralph@tks.lk 

Richard Pieris Securities (Pvt) Ltd, 69, Hyde Park Corner, Colombo 2. Tel: 7448900, Fax: 2675064 Email: 

communication@rpsecurities.com 

Claridge Stockbrokers (Pvt) Ltd, 10, Gnanartha Pradeepa Mawatha, Colombo 8. Tel: 2697974, Fax: 

2677576, Email: fonseka@mackwoods.com Negombo Branch Tel. 0312236666, 0773377490 

New World Securities (Pvt) Ltd, 2nd Floor, 45/2, Braybrooke Street, Colombo 2. Tel: 2358700/20 Fax: 

2358701 Email: info@nws.lk, Website: www.nws.lk 

Arrenga Capital (Pvt) Ltd, Level 23, East Tower, World Trade Centre, Colombo 01. Tel: 7277000 to 98 Fax: 

7277099 Email: dihand@arrengacapital.com Website: www.arrengacapital.com 

LOLC Securities Ltd, Level 18 West Tower, World Trade Center, Echelon Square, Colombo 01. Tel: 

5880880 Fax : 5880607 ,Kurunegala Branch Tel. 0377201221 


95

TRADING MEMBERS - DEBT 

First Capital Markets Ltd, No. 75, Arnold Ratnayake Mawatha, Colombo 10. Tel: 2639898, 2681888 Fax: 

2639899, 2681460 Email: info@firstcapital.lk Website: www.firstcapital.lk 

BRANCHES 

Kandy, 213-215, Peradeniya road, Kandy. Tel: 081-2236010 Fax: 081-2236011 Email: kandy@firstcapital.lk 

Matara, 24, Mezzanine Floor, E.H. Cooray Building, Anagarika Dharmapala Mawatha, Matara. 

Tel: 041-2222988 Fax: 041-2222978 Email: matara@firstcapital.lk 

CUSTODIAN BANKS 

Banque Indosuez; C/O Hatton National Bank Limited, Cinnamon Garden Branch, 251, 

Dharmapala Mawatha, Colombo 07, T: +94 11 2686537, 2689176 

Citi Bank; 65 C, Dharmapala Mawatha, P.O. Box 888, Colombo 07 

T: +94 11 2447316/8, 2447318, 2449061, 2328526, 4794700 

Commercial Bank of Ceylon Limited; Commercial House, 21, Bristol Street, P.O. Box 853, 

Colombo 01, T: +94 11 2445010-15, 238193-5, 430420, 336700 

Deutsche Bank; P.O. Box 314, No. 86, Galle Road, Colombo 03, T: +94 11 2447062, 2438057 

Hatton National Bank Limited; HNB Towers, 479, T.B. Jayah Mawatha, T: +94 11 2664664 

The Hong Kong and Shanghai Banking Corporation Limited; 24, Sir Baron Jayathilake 

Mawatha, Colombo 01, T: +94 11 2325435, 2446591, 2446303, 2346422 

People’s Bank; Head Office, 5 th Floor,Sir Chittampalam A Gardiner Mawatha, Colombo 02 

T: +94 11 2781481, 237841-9, 2446316-15, 2430561 

Standard Chartered Bank; 37, York Street, P. O. Box 112, Colombo 01, T: +94 11 4794400, 2480000 

State Bank of India; 16, Sir Baron Jayathilake Mawatha, Colombo 01 

T: +94 11 2326133-5, 2439405-6, 2447166, 2472097 

Seylan Bank Limited; Level 8, Ceylinco Seylan Towers,90, Galle Road, Colombo 03 

T: +94 11 2456789, 4-701812, 4-701819, 4-701829 

Union Bank of Colombo Limited; 15A, Alfred Place, Colombo 03, T: +94 11 2370870 


96

DETAILS OF THE PROPERTIES 


97 

Annexure VI 

FREEHOLD PROPERTY 

Alawwa Branch 64, Giriulla Road, Alawwa 

Aluthgama Branch 267, Galle Road, Aluthgama 

Ambalangoda Branch 274, Main Street, Ambalangoda 

Ambalantota Branch 11, Wanduruppa Road, Ambalantota 

Badulla Fernham Bunglow & Prop. Badulla 

Badulla Uva Pro. Off. 17, Hill Drive, Keppetipola Rd, Badulla 

Balangoda Branch 137, Main Street, Balangoda 

Bambalapitiya Branch 20, Galle Road, Colombo 04 

Bandarawela Branch 198B, Badulla Road, Bandarawela 

Bandarawela Holiday Home Bandarawela 

Batticaloa Branch Covington Road, Batticaloa 

Beruwala Branch Beruwela 

Borella Branch 71, Danister de Silva Mawatha, Colombo 08 

Chilaw Branch Radaguru Edmund Peiries Mawatha, Chilaw 

Colombo 01- City Office 41, Bristol Street, Colombo 01 

Colombo 01- G.O.H. (Y.S.B) York Street, Colombo 1. 

Colombo 07- G.M’S Bangalow Green Path, Colombo 7 

Colombo Darly Rd. Stores Browns Bldg Colombo 10 

Dehiowita Branch 62, Main Street, Dehiowita 

Dehiwala Branch 207, Galle Road, Dehiwala 

Dickoya Upper/ Lower Glencarn Bung. Dickoya 

Dummalasooriya Branch 227, Kuliyapitiya, Madampe Road, Dummalasooriya 

Galaha Branch 59/37, Deltota Road, Galaha 

Galle Branch 2, Gamini Road, Galle 

Galle Province Office 2, Light House Street, Fort, Galle 

Gampaha Branch Gampaha 

Gampola Branch 44, Kadugannawa Road, Gampola 

Grand Pass Branch 703, Sirimawo Bandaranayeke Mawatha, Colombo 

14 

Hakmana Branch Beliatta Road, Hakmana 

Haputale Branch (Browns) 20, Station Road, Haputale 

Haputale Woodland Bunglow Bandarawela Road, Haputale. 

Hatton Branch 46, Circular Road, Hatton 

Hatton Staff Quart Hatton 

Horana Branch 87, Anguruwathota Road, Horana 

Idama Branch Moratuwa 

Imaduwa Branch Ahangama Road, Imaduwa 

Ja Ela Branch 19, Negombo Road, Ja Ela 

Jaffna Area Office 56, Stanley Road, Jaffna 

Jaffna Branch 476, 476A, Hospital Road, Jaffna 

Kadawatha Branch 469, Ragama Road, Kadawatha 

Kalutara Area Office Kalutara 

Kalutara Branch 218, Galle Road, Kaluthara South, Kaluthara

Kandy 2 nd City Branch 22, Dalada veediya, Kandy 

Kegalle Branch 110, Colombo Road, Kegalle 

Kollupitiya- Walkers Sons Ltd. 28, St. Michael’s Road, Colombo 03 

Kurunegala AGM’s Quart’s Kurunegala 

Kurunegala Bazaar Branch Commercial Complex, Kurunegala 

Kurunegala Branch (Cond.) Kurunegala 

Kurunegala Chief Mgr’s Quart 34, Colombo Road, Kurunegala 

Kurunegala Province Office 18, Mahinda Mawatha, Kurunegala 

Lindula Ridge Holiday Home Lindula 

Madampe Branch 10, Station Road, Madampe 

Madurankuliya Branch 16A, Main Street, Madurankuliya 

Maharagama C.T.I Maharagama 

Maharagama Branch 88, High Level Road, Maharagama 

Mannar Branch Staff Quarters 52, Pallimunai Road, Grand Bazaar, 

Mannar 

Maskeliya Branch 66, Upcot Road, Maskeliya 

Matara Bazaar Branch Gunawardena Mawatha, Matara 

Matara Branch 11, Kumarathunga Mawatha, Matara 

Mathugama Branch 72, Agalawatta Road, Matugama 

Moneragala Branch and Mgr’s Quart. 401, Wellawaya Road, Moneragala 

Moneragala Staff Quarters Moneragala 

Mutur Branch 38, Batticaloa Road, Muttur 

Narammala Branch 139, Negombo Road, Narammala 

Nawalapitiya Branch 6, Gampola Road, Nawalapitiya 

Negombo Branch 118, Rajapakse Broadway, Negonbo 

Nelliadi Branch Thikkam Road, Koraveddy, Nelliady 

Nugegoda Branch 174, High Level Road, Nugegoda 

Nuwara Eliya Branch 43, Lawson Street, Nuwara Eliya 

Nuwara Eliya Holiday Home Hill Street, Nuwara Eliya 

Nuwara Eliya Property Hill Street, Nuwara Eliya 

Nuwara Eliya Staff Quarters Hill Street, Nuwara Eliya 

Panadura Branch 21, Susantha Mawatha, Panadura 

Pettah Branch 212/63, Gas Works Street, Colombo 11 

Potuvil Branch Potuvil Arugambay Road, Division No. 3, 

Potuvil 

Ratnapura Branch 6, Dharmapala Mawatha, Ratnapura 

Ratnapura Branch (BMC. 1/L) 163, Main Street, Ratnapura 

Talawakele Branch 23,25,29, Hatton Road, Talawakele 

Talawakele Staff Quart. Talawakelle 

Tangalle Branch Tangalle 

Trincomalee Branch 24, Inner Harbour Road, Trincomalee 

Valachchenai Branch Main Street, Valachchenai 

Wadduwa Branch 557/A, Galle Road, Wadduwa 

Weligama Branch 239, Main Street, Weligama 

Wellawatte Branch 149/2, Galle Road, Colombo 06 

World Trade Centre Colombo 01 Level 1 & 2, West Tower 


98

. 

Location Address 

Ampara Staff Quart. Ampara 

Ampara Branch 115, A D S Senanayaka Street, Ampara 

Ampara Manager’s Quart. Ampara 

Anuradhapura Branch Quarters Anuradhapura 

Anuradhapura Branch Maithripala Senanayake Mawatha, Anuradhapura 

Anuradhapura Pilgrims Rest Anuradhapura 

Anuradhapura Province office Anuradhapura 

Anuradhapura Staff Quarters Anuradhapura 

Aralaganwila Branch Aralaganwila, Aralaganwila 

Avissawella Branch 47,Dharmapala Mawatha, Avissawella 

Badulla Branch Bank Road, Badulla 

Bakamuna Branch Bakamuna 

Bandaragama Branch Janadhipathi Mawatha, Bandaragama 

Bentota Branch Tourist Village, Bentota 

Bulathsinhala Branch 40,Horana Road, Bulathsinhala 

Buttala Branch 23, Moneragala Road, Buttala 

Dambulla Dambulla 

Dehiattakandiya Branch New Town, Dehiattakandiya 

Devinuwara Branch Tangalle Road, Devinuwara 

Diigana Digana 

Elpitiya Branch Janadhipathi Mawatha, Elpitiya 

Embilipitiya Branch 545, New Town, Embilipitiya 

Embilipitiya Staff Quarters Embilipitiya 

Galenbindunuwewa Branch Denzil Kobbekaduwa Mawatha, 

Galenbindunuwewa 

Galgamuwa Branch 67,69, Anuradhapura Road, Galgamuwa 

Galkiriyagama Branch New Town, Galkiriyagama 

Galnewa Branch Thambuttegama Road, Galnewa 

Girandurukotte Branch New Town, Girandurukotte 

Hambantota Br. & Area Manager’s Quarters 33,Tower Hill Road, Hambantota 

Hambantota Kachcheri Branch Hambantota 

Hambantota Staff Quarters Hambantota 

Hikkaduwa Branch 223,Galle Road, Hikkaduwa 

Horowpathana Branch Anuradhapura Road, Horowpathana 

Hulftsdrop Branch 30, St.Sebastian Hill,Colombo 12 

Ipalogama Branch Ipalogama 

Kahatagasdigiliya Branch & Managers Quarters Trincomalee Road, Kahatagasdigiliya 

Kalmunai Br. & Manager’s Quarters 78,Kitddanki Road, Kalmunai 

Kamburupitiya Br. & Manager’s Quarters School Lane, Kamburupitiya 

Kantale Bazaar Branch 91, Akrabodhi Mawatha, Kantale 

Kataragama Branch 315, Tissamaharama Road, Kataragama 

Kataragama Pilgrims Rest Kataragama 

Kataragama Staff Quarters Kataragama 

Kekirawa Branch 3,Habarana Road, Kekirawa 

Koggala Branch Koggala, Habaraduwa 

Kuliyapitiya Branch & Managers Quarters 70, Madampe Road, Kuliyapitiya 

Kuruwita Branch 60, Ratnapura Road, Kuruwita 

Madatugama Branch Kekirawa, Dambulla Road, Madatugama 

Mahiyangana Branch 7,New Town, Badulla Road, Mahiyangana 

Mannar Br. & Manager’s Quarters Mannar 

Matale Br. & Manager’s Quarters 5/2, Trincomalee Street, Matale 

Medawachchiya Branch 36, Jaffna Road, Medawachchiya 

Medirigiriya Branch School Junction, Medirigiriya 

Meegallewa Branch Meegallewa, Meegallewa 

Meegoda Branch (Economic Centre) Meegoda 

Middeniya Branch Middeniya 

Mihintale Branch Trincomalee Road, Mihintale 

New Head Office Building 4, Bank of Ceylon Mawatha, Colombo 1. 


99

Nikaweratiya Branch & Managers Quarters Puttalam Road, Nikaweratiya 

Nittambuwa Branch Market Complex, Nittambuwa 

Nivitigala Branch 72, Kalawana Road, Nivitigala 

Nochchiyagama Branch Main Street, Nochchciyagama 

Nochchiyagama Staff Quarters Nochchiyagama 

Nuwara Eliya Municipal Rest Nuwara Eliya 

Padavi- Parakramapura Branch Padavi, Parakramapura 

Padavi- Parakramapura Staff Quarters Padavi- Parakramapura 

Pannala Branch Public Ground Road, Pannala 

Peradeniya Branch 115/7, Sirimavo Bandaranayaka Mawatha, 

Peradeniya 

Pitigala Branch 39, North Pitigala Road, Pitigala 

Polonnaruwa New Town Branch Polonnaruwa 

Polonnruwa Staff Quarters Polonnaruwa 

Puttalam Branch & Manager’s Quaters 53, Kurunegala Road, Puttalam 

Puttlam Kachcheri Branch Puttalam 

Puttalam Staff Quarters Puttalam 

Puttalam Area Office Puttalam 

Rambukkana Rambukkana 

Talgaswela Branch Talgaswela 

Thambuttegama Branch Rajanganaya Road, Thambuttegama 

Thambuttegama Staff Quarters Thambuttegama 

Tissamaharama Branch 70, Main Street, Tissamaharama 

Torrington Branch 30A, Independent Avenue, Colombo 7 

Ududumbara Branch 44,46, Mahiyangana Road 

Vanni Area Office & Quarters Vavuniya 

Vavuniya Branch & Manager’s Quarters 75, Station Road, Vavuniya 

Vavuniya Staff Quarters Vavuniya 

Weeraketiya Branch Weeraketiya 

Welimada Branch 12,12A, Hemapala Munidasa Mawatha, Welimada 

Wellawaya Branch Tissamaharama Road, Wellawaya 


100


101 

Annexure VII 

The audit of the accompanying financial statements of Bank of Ceylon (“Bank”) and theconsolidated financial statements of 

the Bankand its Subsidiaries as at 31 December 2010 which comprise the Balance Sheet as at that date, and the Income 

Statement, Statement ofChanges in Equity and Cash Flow Statement for the year then ended, and a summary of significant 

accounting policies and other explanatory notes (Nos. 1 to 48) to the financial statements was carried out under my direction 

in pursuance of provisions in Article 154 (1) of theConstitution of the Democratic Socialist Republic of Sri Lanka. The financial 

statements of the Subsidiaries were audited by firms of Chartered Accountants in public practice appointed by the members 

of the respective Subsidiaries. 

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS 

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Sri 

Lanka Accounting Standards. This responsibility includes: designing, implementing and maintaining internal controls relevant 

to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud 

or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the 

circumstances. 

SCOPE OF AUDIT AND BASIS OF OPINION 

MY responsibility is to express an opinion on these financial statements based on my audit.The audit was carried out in 

accordance with Sri Lanka Auditing Standards which require that the audit shall be planned and performed to obtain 

reasonable assurance as to whether the financial statements are free from material misstatements. The audit includes 

examining on a test basis, evidence supporting the amounts and disclosures in the said financial statements. The audit also 

includes assessing the accounting policies used and significant estimates made by the management as well as evaluating the 

overall presentation of financial statements. I have obtained all the information and explanations which to the best of my 

knowledge and belief were necessary for the purpose of my audit. I therefore believe that my audit provides a reasonable 

basis for my opinion. 

OPINION 

So far as appears from my examination, I am of opinion that the Bank of Ceylon had maintained proper accounting records for 

the year ended31 December 2010 and the financial statements give a true and fair view of the state of affairs of the Bank of 

Ceylon as at 31 December 2010 and its profit and cash flows for the year then ended in accordance with Sri Lanka 

Accounting Standards. 

I am of opinion that the consolidated financial statements give a true and fair view of the state of affairs as at 31 December 

2010 and the profit and cash flows for the year then ended in accordance with Sri Lanka Accounting Standards, of the Bank, 

and its Subsidiaries dealt with thereby, so far as concerns the shareholders of the Bank. 

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS 

These financial statements present the information required by the Banking Act, No. 30 of 1988 and subsequent amendments 

thereto. 

EXEMPTION 

The Bank has been exempted from the provisions of Part II of the Finance Act, No. 38 of 1971 by an Order of the then 

Minister of Finance published in the Government Gazette No. 715 of 14 May 1992 by virtue of powers vested in him by 

Section 5 (1) of the said Finance Act. 

REPORT TO PARLIAMENT 

My report to Parliament in pursuance of provisions in Article 154 (6) of the Constitution will be tabled in due course. 

H A S Samaraweera 

Acting Auditor General

INCOME STATEMENT 

For the year ended 31 December Note 2010 

Rs. ’000 

Income 

Interest income 

Interest expense 

Net interest income 

Fee and commission income 

Fee and commission expenses 

Net fee and commission income 

Foreign exchange profit 

Dividend income 

Net gains from investment in securities 

Other operating income 

Operating income 

Operating expenses 

Personnel costs 

Staff retirement benefits 

Premises, equipment and establishment expenses 

Other operating expenses 

Operating profit before provisions 

Provision for loan losses 

Recovery of non-performing advances 

Provision for fall in value of investments and 

dealing securities 

Operating profit before VAT 

Value added tax on financial services 

Operating profit 

Share of profit of Associate Companies before tax 

Profit before taxation 

Provision for taxation 

Profit after taxation 

Attributable to: 

Equity holder of the parent 

Minority interest 

Profit for the year 

Per Share: 

Basic earnings per share (Rs.) 

Dividend per share (Rs.) 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

11 

12 

13 

63,362,866 

50,853,347 

(31,205,160) 

19,648,187 

6,014,178 

(467,298) 

5,546,880 

408,686 

468,998 

3,105,791 

1,143,913 

5,127,388 

30,322,455 

(8,044,072) 

(2,266,119) 

(2,858,245) 

(2,908,256) 

(16,076,692) 

14,245,763 

(1,559,894) 

1,367,953 

– 

14,053,822 

(4,001,253) 

10,052,569 

14 – 

10,052,569 

15 (3,687,257) 

6,365,312 

16 

16 

6,365,312 

– 

6,365,312 

1,273.06 

619.28 

Bank 

2009 

Rs. ’000 

63,461,366 

53,076,779 

(38,266,874) 

14,809,905 

4,255,204 

(544,395) 

3,710,809 

1,566,916 

347,878 

1,961,210 

753,247 

4,629,251 

23,149,965 

(8,107,775) 

(2,409,631) 

(2,677,921) 

(2,450,593) 

(15,645,920) 

7,504,045 

(1,801,705) 

1,500,132 

– 

7,202,472 

(2,994,825) 

4,207,647 

– 

4,207,647 

(1,123,641) 

3,084,006 

3,084,006 

– 

3,084,006 

616.80 

269.28 

Change 

% 

(0.2) 

(4.2) 

(18.5) 

32.7 

41.3 

(14.2) 

49.5 

(73.9) 

34.8 

58.4 

51.9 

10.8 

31.0 

(0.8) 

(6.0) 

6.7 

18.7 

2.8 

89.8 

(13.4) 

(8.8) 

– 

95.1 

33.6 

138.9 

– 

138.9 

228.2 

106.4 

106.4 

– 

106.4 

2010 

Rs. ’000 

66,866,792 

53,062,286 

(32,019,161) 

21,043,125 

6,487,663 

(556,008) 

5,931,655 

418,461 

257,910 

3,508,297 

1,524,738 

5,709,406 

32,684,186 

(8,731,783) 

(2,299,079) 

(2,751,960) 

(3,573,401) 

(17,356,223) 

15,327,963 

(1,725,997) 

1,394,539 

(6,957) 

14,989,548 

(4,126,961) 

10,862,587 

212,898 

11,075,485 

(4,162,289) 

6,913,196 

6,760,310 

152,886 

6,913,196 

1,352.06 

619.28 

The Significant Accounting Policies on pages 108 to129 and notes on pages 130 to 199 form an integral part of these Financial Statements. 

Group 

2009 Change 

Rs. ’000% 

66,128,194 

55,279,046 

(39,489,821) 

15,789,225 

4,353,702 

(550,477) 

3,803,225 

1,566,916 

150,456 

2,012,436 

1,128,780 

4,858,588 

24,451,038 

(8,572,330) 

(2,427,467) 

(2,491,248) 

(2,954,607) 

(16,445,652) 

8,005,386 

(1,894,977) 

1,506,205 

49,005 

7,665,619 

(3,076,362) 

4,589,257 

130,653 

4,719,910 

(1,402,987) 

3,316,923 

3,299,873 

17,050 

3,316,923 

659.97 

269.28 

1.1 

(4.0) 

(18.9) 

33.3 

49.0 

1.0 

56.0 

(73.3) 

71.4 

74.3 

35.1 

17.5 

33.7 

1.9 

(5.3) 

10.5 

20.9 

5.5 

91.5 

(8.9) 

(7.4) 

(114.2) 

95.5 

34.2 

136.7 

62.9 

134.7 

196.7 

108.4 

104.9 

796.7 

108.4

BALANCE SHEET 

As at 31 December Note 2010 

Rs. ’000 

ASSETS 

Cash and short-term funds 

Balances with Central Banks 

Treasury bills, bonds and other eligible bills 

Securities purchased under re-sale agreements 

Dealing securities 

Placements with and loans to other banks 

Treasury bonds maturing after one year 

Loans and advances to customers 

- Bills of exchange 

- Loans & advances 

- Lease rentals receivable - within one year 

- Lease rentals receivable - one to five years 

- Lease rentals receivable - after five years 

Government of Sri Lanka Restructuring Bonds 

Investment securities 

Investment properties 

Investments in Associate Companies 

Investments in Subsidiary Companies 

Other assets 

Property, plant & equipment 

Leasehold land 

Intangible assets 

Total assets 

FINANCED BY: 

LIABILITIES 

Deposits from customers 

Borrowed funds 

Securities sold under re-purchase agreements 

Insurance provision - life 

Insurance provision - non life 

Tax payable 

Deferred tax liability 

Other liabilities 


Total liabilities 

SHAREHOLDERS’ EQUITY 

Stated capital 

Permanent reserve fund 

Retained profits 

Reserves 

Total equity attributable to the parent 


Total equity 

Total shareholders’ equity and liabilities 

Commitments and contingencies 

17 

18 

19 

20 

21 

22.1 

22.2 

22.3 

22.4 

22.5 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

34 

35.1 

35.2 

36 

37 

38 

39 

40 

41 

14,103,803 

25,894,466 

45,379,013 

40,840,091 

3,232,348 

42,679,798 

51,296,744 

1 5,395,903 

353,097,916 

1,837,935 

2,387,835 

1,995 

372,721,584 

8,547,000 

80,643,496 

– 

844,658 

5,279,094 

17,706,268 

5,544,589 

77,515 

163,826 

714 954 293 

524,232,697 

52,445,153 

53,522,487 

– 

– 

2,199,758 

457,587 

15,258,392 

38,706,348 

686,822,422 

5,000,000 

2,777,500 

18,712,777 

1,641,594 

28,131,871 

– 

28,131,871 

714,954,293 

42 223,164,930 

Bank 

2009 Change 

Rs. ’000 % 

13,508,852 

16,263,468 

28,735,396 

6,615,045 

1,827,869 

45,867,067 

46,910,486 

15,254,316 

245,602,284 

1,920,713 

2,287,871 

207 

265,065,391 

8,547,000 

75,844,742 

– 

844,658 

3,191,859 

19,184,449 

5,660,753 

63,290 

110,812 

538,241,137 

408,607,442 

33,098,377 

34,203,701 

– 

– 

189,824 

409,453 

18,789,140 

18,044,613 

513,342,550 

5,000,000 

2,650,000 

15,819,588 

1,428,999 

24,898,587 

– 

24,898,587 

538,241,137 

246,244,648 

4.4 

59.2 

57.9 

517.4 

76.8 

(6.9) 

9.4 

0.9 

43.8 

(4.3) 

4.4 

863.8 

40.6 

– 

6.3 

– 

– 

65.4 

(7.7) 

(2.1) 

22.5 

47.8 

32.8 

28.3 

58.5 

56.5 

– 

– 

1,058.8 

11.8 

(18.8) 

114.5 

33.8 

– 

4.8 

18.3 

14.9 

13.0 

– 

13.0 

32.8 

(9.4) 

2010 

Rs. ’000 

13,754,857 

25,894,466 

46,348,696 

40,840,091 

3,805,443 

47,773,386 

51,749,203 

16,015,528 

355,265,395 

4,560,906 

6,743,744 

2,224 

382,587,797 

8,547,000 

81,118,367 

386,867 

1,284,563 

– 

18,313,650 

7,370,308 

119,978 

170,404 

730,065,076 

529,318,700 

57,432,015 

52,968,787 

66,937 

252,774 

2,422,527 

489,525 

16,417,749 

39,434,565 

698,803,579 

5,000,000 

2,777,500 

20,393,029 

2,025,557 

30,196,086 

1,065,411 

31,261,497 

730,065,076 

224,942,115 

The Significant Accounting Policies on pages 108 to 129 and notes on pages 130 to 199 form an integral part of these Financial Statements. 

These Financial Statements give a true and fair view of the state of affairs of Bank of Ceylon and the Group as at 31 December 2010 and its profit for the year then ended. 

W A Asoka Rupasinghe 

Chief Financial Officer 

The Board of Directors is responsible for the preparation and presentation of these Financial Statements. 

Approved and signed for and on behalf of the Board by, 

Dr. Gamini Wickramasinghe 

Chairman 

Colombo 

16 March 2011 

R Sivaraman 

Director 

B A C Fernando 


Group 

2009 Change 

Rs. ’000 % 

13,517,254 

16,263,468 

29,688,285 

6,667,925 

2,137,383 

45,887,067 

46,910,486 

15,700,891 

247,201,769 

4,790,308 

5,106,358 

300 

272,799,626 

8,547,000 

76,453,242 

391,730 

1,084,065 

– 

19,774,648 

7,072,057 

107,110 

119,205 

547,420,551 

411,459,582 

35,767,123 

32,968,041 

41,336 

181,569 

287,650 

440,132 

19,627,591 

19,113,386 

519,886,410 

5,000,000 

2,650,000 

17,115,523 

1,817,762 

26,583,285 

950,856 

27,534,141 

547,420,551 

246,316,116 

1.8 

59.2 

56.1 

512.5 

78.0 

4.1 

10.3 

2.0 

43.7 

(4.8) 

32.1 

641.3 

40.2 

– 

6.1 

(1.2) 

18.5 

– 

(7.4) 

4.2 

12.0 

43.0 

33.4 

28.6 

60.6 

60.7 

61.9 

39.2 

742.2 

11.2 

(16.4) 

106.3 

34.4 

– 

4.8 

19.1 

11.4 

13.6 

12.0 

13.5 

33.4 

(8.7)

STATEMENT OF CHANGES IN EQUITY 

Bank 

Balance as at 01 January 2009 

Net profit for the year 2009 

Dividends for 2009 

Transfers to permanent reserve 

Revaluation adjustment 

Net exchange translation adjustment 

Transfers to primary dealer special risk reserve 

Balance as at 31 December 2009 





Transfers to exchange gain on conversion of 

London branch into a Subsidiary 




Group 





Transfers to other reserves 

Share issue of Subsidiaries 

Revaluation adjustment 

Adjustments 

Net increase due to change in shareholding 








Adjustments 

Net increase due to change in shareholding 

Transfers to exchange gain on conversion of 

London branch into a Subsidiary 




Note . 

16.1 

40 

41.1 

41.3 

41.4 

16.1 

40 

41.3 

41.3 

41.4 

Note 

16.1 

40 

41.1 

41.3 

41.4 

16.1 

40 

41.3 

41.3 

41.4 

Stated 

capital 

Rs. ’000 

5,000,000 

– 

– 

– 

– 

– 

– 

5,000,000 

5,000,000 

– 

– 

– 

– 

– 

– 

5,000,000 

Permanent 

reserve fund 

Rs. ’000 

2,585,000 

– 

– 

65,000 

– 

– 

– 

2,650,000 

2,650,000 

– 

– 

127,500 

– 

– 

– 

2,777,500 

Reserves 

Other Revaluation 

reserves reserves 

Rs. ’000 Rs. ’000 

1,055,732 

– 

– 

– 

– 

60,397 

187,571 

1,303,700 

1,303,700 

– 

– 

– 

(39,566) 

3,948 

248,213 

1,516,295 

Attributable to the parent 

Stated Permanent Reserves 

capital reserve fund Other Revaluation 

reserves reserves 

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ’000 

5,000,000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

5,000,000 

5,000,000 

– 

– 

– 

– 

– 

– 

– 

– 

5,000,000 

2,585,000 

– 

– 

65,000 

– 

– 

– 

– 

– 

– 

– 

2,650,000 

2,650,000 

– 

– 

127,500 

– 

– 

– 

– 

– 

2,777,500 

1,299,807 

– 

– 

– 

91,295 

– 

– 

– 

– 

60,397 

187,571 

1,639,070 

1,639,070 

– 

– 

– 

– 

– 

(39,566) 

(852) 

248,213 

1,846,865 

180,354 

– 

– 

– 

– 

– 

(1,662) 

– 

– 

– 

– 

178,692 

178,692 

– 

– 

– 

– 

– 

– 

– 

– 

178,692 


126,961 

– 

– 

– 

(1,662) 

– 

– 

125,299 

125,299 

– 

– 

– 

– 

– 

– 

125,299 

Retained 

profits 

Rs. ’000 

15,826,941 

3,299,873 

(1,346,410) 

(65,000) 

(91,295) 

– 

– 

(321,015) 

– 

– 

(187,571) 

17,115,523 

17,115,523 

6,760,310 

(3,096,410) 

(127,500) 

– 

(10,681) 

– 

– 

(248,213) 

Retained 

profits 

Rs. ’000 

14,334,563 

3,084,006 

(1,346,410) 

(65,000) 

– 

– 

(187,571) 

15,819,588 

15,819,588 

6,365,312 

(3,096,410) 

(127,500) 

– 

– 

(248,213) 

18,712,777 

Minority 

interest 

Rs. ’000 

655,342 

17,050 

– 

– 

237,094 

– 

– 

71,999 

– 

– 

950,856 

950,856 

152,886 

Total 

equity 

Rs. ’000 

23,102,256 

3,084,006 

(1,346,410) 

– 

(1,662) 

60,397 

– 

24,898,587 

24,898,587 

6,365,312 

(3,096,410) 

– 

(39,566) 

3,948 

– 

28,131,871 

Total 

equity 

Rs. ’000 

25,547,444 

3,316,923 

(30,629) (1,377,039) 

– 

– 

237,094 

(1,662) 

(321,015) 

71,999 

60,397 

– 

27,534,141 

27,534,141 

6,913,196 

(38,143) (3,134,553) 

– 

– 

(188) (188) 

– (10,681) 

– 

– 

– 

20,393,029 1,065,411 

(39,566) 

(852) 

– 

31,261,497

CASH FLOW STATEMENT 


Rs. ’000 

Cash flows from operating activities 

Interest receipts 

Interest payments 

Commissions, fees and receipts from other operating activities 

Premium received from policyholders 

Claims and benefits paid 

Reinsurance premium paid 

Reinsurance receipts in respect of claims 

Cash paid to and on behalf of employees 

Cash payments to suppliers 

Recovery of loans written-off in previous years 

Value added tax on financial services paid 

Cash flows from operating activities before changes in 

operating assets and liabilities 

(Increase)/decrease in operating assets 

Deposits held for regulatory purposes 

Funds advanced to customers 

Net increase in credit card receivable 

Short-term marketable securities 

Other operating assets 

Increase/(decrease) in operating liabilities 

Deposits from other banks 

Deposits from customers 

Other operating liabilities 

Net cash from/(used in) operating activities before income tax 

Income tax paid 

Net cash from/(used in) operating activities 

Cash flows from investing activities 

Net increase in Treasury bills and other eligible bills 

Proceeds from sale of investment securities 

Dividends received 

Purchase of investment securities 

Net cash effect on investment in Subsidiaries and Associates 

Net cash effect on investment in Bank of Ceylon (UK) Limited 

Net cash effect on acquisition of Subsidiaries 

Net cash effect on investment in other Subsidiaries and Associates 

Purchase of property, plant & equipment 

Purchase of intangible assets 

Purchase of leasehold lands 

Purchase of investment properties 

Purchase of securities purchased under re-sale agreements 

Proceeds from sale of property, plant & equipment 

Net cash from/(used in) investing activities 

Cash flows from financing activities 

Proceeds from issue of shares 

Proceeds from issue of securities sold under re-purchase agreements 

Proceeds from issue/(redemption) of debentures 

Net increase/(decrease) in other borrowings 

Dividends paid to Government of Sri Lanka 

Dividends to minority shareholders 

Net cash from financing activities 

Net increase/(decrease) in cash and cash equivalents 

Cash and cash equivalents at the beginning of the year 

Cash and cash equivalents at the end of year 

II (a) 

II (b) 

II (c) 

48,958,295 

(32,236,920) 

9,121,713 

– 

– 

– 

– 

(9,544,644) 

(5,813,787) 

70,866 

(3,667,377) 

I 6,888,146 

(9,630,998) 

(107,937,795) 

(259,654) 

(1,324,765) 

900,628 

(118,252,584) 

179,675 

117,571,827 

(1,611,323) 

4,775,741 

(1,692,034) 

3,083,707 

(16,668,014) 

23,571,307 

468,998 

(31,567,092) 

(1,893,873) 

– 

– 

(1,043,502) 

(107,887) 

(16,521) 

– 

(34,225,046) 

89,179 

(61,392,451) 

– 

19,318,786 

20,678,813 

18,642,032 

(2,923,205) 

– 

55,716,426 

(2,592,318) 

59,375,919 

III 56,783,601 

Bank 

2009 

Rs. ’000 

52,699,040 

(36,221,614) 

4,917,426 

– 

– 

– 

– 

(9,868,539) 

(4,165,318) 

102,013 

(2,933,948) 

4,529,060 

(634,388) 

5,520,355 

60,376 

(704,119) 

(961,357) 

3,280,867 

420,101 

92,117,775 

1,378,267 

101,726,070 

(1,611,027) 

100,115,043 

(2,748,295) 

777,133 

347,878 

(13,917,685) 

– 

– 

(433,954) 

(1,390,830) 

(55,548) 

– 

– 

(4,855,545) 

110,617 

(22,166,229) 

– 

(15,597,955) 

– 

(28,199,518) 

(1,346,410) 

– 

(45,143,883) 

32,804,931 

26,570,988 

59,375,919 

2010 

Rs. ’000 

51,048,298 

(33,076,221) 

10,154,963 

558,840 

(210,662) 

(80,676) 

4,897 

(10,265,315) 

(6,433,716) 

97,452 

(3,793,085) 

8,004,775 

(9,630,998) 

(110,018,536) 

(259,654) 

(1,581,389) 

2,376,806 

(119,113,771) 

418,628 

117,440,490 

(1,481,636) 

5,268,486 

(1,927,120) 

3,341,366 

(16,684,808) 

23,735,457 

257,910 

(32,050,072) 

– 

(23,625) 

(187,186) 

(1,106,282) 

(109,473) 

(16,521) 

(2,659) 

(34,172,166) 

98,738 

(60,260,687) 

– 

20,000,746 

20,338,953 

21,664,892 

(2,923,205) 

(38,143) 

59,043,243 

2,123,922 

59,404,321 

61,528,243 

Group 

2009 

Rs. ’000 

54,790,121 

(37,191,635) 

5,335,677 

264,405 

(126,668) 

(47,696) 

8,557 

(10,350,930) 

(4,262,472) 

108,086 

(3,015,485) 

5,511,960 

(634,388) 

4,388,370 

60,376 

(793,699) 

(713,922) 

2,306,737 

420,101 

92,861,829 

1,171,716 

102,272,343 

(1,858,874) 

100,413,469 

(3,221,280) 

777,133 

150,456 

(14,262,931) 

– 

(134,800) 

(126,048) 

(1,430,799) 

(56,707) 

– 

(110,398) 

(4,908,425) 

120,878 

(23,202,921) 

237,094 

(15,751,965) 

(88,750) 

(27,453,459) 

(1,346,410) 

(30,629) 

(44,434,119) 

32,776,429 

26,627,892 

59,404,321



Rs. ’000 

Note I 

Reconciliation of operating profit before taxation with 

cash flow from operating activities 


Add/(Less): 

Net gain from dealing securities 

Net gain from investment securities 

Reversal of provision for non-performing advances 

Net (gain)/loss on marked to market valuation on 

Government securities 

Net (gain)/loss on marked to market valuation 

Profit on sale of property, plant & equipment 

Provision for diminution in value of investment and dealing securities 

Provision made for staff payments 

Provision made for value added tax 

Exchange revaluation 

Share of profit of Associate Companies 

Notional tax credit on interest on Government securities 

Depreciation of investment properties 

Depreciation of property, plant & equipment 

Amortisation of leasehold land 

Amortisation of intangible assets 

Loan loss provision 

Accrued interest on loans and advances 

Accrued interest on deposits and borrowings 

Accruals for expenses 

Equity adjustment of Associate Companies 

Goodwill on acquisition 

Dividends received from Subsidiaries and Associates 

Profit from sale of Associate Companies 

Cash flows from operating activities before changes in 

operating assets and liabilities 

Note II 

Net cash effect on investment in Subsidiaries and Associates 

(a) Net cash effect on investment in Bank of Ceylon (UK) Limited 

[On 30 April 2010 Bank of Ceylon branch in London was converted into a 

Subsidiary named Bank of Ceylon (UK) Limited] 

Net identifiable assets and liabilities in: 

Securities held on own account 

Loans and Advances to customers 

Property, plant and equipment 


Deposits from banks 

Customer deposit accounts 

Other payables 

Net identifiable assets and liabilities transferred to Bank of Ceylon (UK) Limited 

Cash outflow on the additional investment made in Bank of Ceylon (UK) Limited 

Exchange translation adjustment 

Total investment in Bank of Ceylon (UK) Limited since classified as 

investment in Subsidiaries 

8 

14 

15.5 

25 

29 

30 

31 

12 

(64,339) 

(1,214,701) 

(1,297,087) 

(132,069) 

(79,714) 

(26,775) 

– 

765,546 

333,876 

(279,536) 

– 

(659,630) 

– 

784,993 

2,296 

54,873 

1,559,894 

(1,235,422) 

(1,031,760) 

(422,149) 

– 

– 

(222,719) 

– 

6,888,146 

2010 

Rs. ’000 

Bank 

2009 

Rs. ’000 

(835,429) 

(906,066) 

(1,398,119) 

(361,490) 

(164,076) 

(98,371) 

– 

648,867 

60,877 

(1,402,125) 

– 

(351,925) 

– 

686,428 

8,648 

185,473 

1,801,705 

(25,813) 

2,045,260 

627,043 

– 

– 

(199,474) 

– 

4,529,060 

2010 

Rs. ’000 

(73,573) 

(1,174,383) 

(1,297,087) 

(132,069) 

(79,714) 

(32,494) 

(6,957) 

765,547 

333,876 

(277,475) 

(212,898) 

(685,027) 

3,074 

889,616 

3,653 

59,076 

1,725,997 

(1,328,958) 

(1,057,060) 

(422,149) 

(5,336) 

24,676 

– 

(91,045) 

8,004,775 

Group 

2009 

Rs. '000 

10,052,569 4,207,647 11,075,485 4,719,910 

(912,426) 

(217,340) 

(450,090) 

(283,068) 

(704,745) 

2,126,247 

250,121 

(191,301) 

(1,893,873) 

(2,061) 

(2,087,235) 

(836,290) 

(902,061) 

(1,398,119) 

(361,490) 

(164,076) 

(111,975) 

49,006 

648,867 

60,877 

(1,402,125) 

(130,653) 

(380,873) 

3,060 

790,745 

20,857 

189,860 

1,894,977 

(108,049) 

2,298,184 

627,043 

3,222 

1,063 

– 

– 

5,511,960


NOTES TO THE CASH FLOW STATEMENT 

(b) Net cash effect on acquisition of Subsidiaries: 

Koladeniya Hydropower (Private) Limited 

(On 3 December 2010 Koladeniya Hydropower (Private) Limited was acquired by 

Property Development PLC as a Subsidiary) 



Trade and other payables 

Net identifiable assets and liabilities 


Cash outflow on acquisition 

MBSL Insurance Company Limited 

(On 7 April 2009 MBSL Insurance Company Limited was acquired by 

Merchant Bank of Sri Lanka PLC as a Subsidiary) 


Cash and cash equivalents 

Investments 

Amounts recceivable 


Trade payables 

Borrowings 


Total purchase price 

Add: Cash of Subsidiaries 

Cash outflow on acquisition of net of cash acquired 

(c) Net cash effect on investment in other Subsidiaries and 

Associates 

Merchant Bank of Sri Lanka PLC 

Ceylease Financial Services Limited 

Ceybank Asset Management (Private) Limited 

MBSL Savings Bank Limited 


2010 

Rs. ’000 

(3,604) 

4,655 

1,051 

(24,676) 

(23,625) 

2009 

Rs. ’000 

(3,806) 

(258,210) 

(165,274) 

(22,075) 

305,105 

6,717 

(1,063) 

(138,606) 

3,806 

(134,800) 

2010 

Rs. ’000 


Rs. ’000 

Note III 

Analysis of cash and cash equivalents 

Cash and short-term funds 


17 

21 

– 

– 

– 

– 

– 

– 

14,103,803 

42,679,798 

56,783,601 

Bank 

Bank 

2009 

Rs. ’000 

(347,906) 

(60,000) 

(26,048) 

– 

– 

(433,954) 

2009 

Rs. ’000 

13,508,852 

45,867,067 

59,375,919 


2010 

Rs. ’000 

– 

– 

– 

(137,186) 

(50,000) 

(187,186) 

2010 

Rs. ’000 

13,754,857 

47,773,386 

61,528,243 

Group 

Group 

2009 

Rs. '000 

– 

– 

(26,048) 

(100,000) 

– 

(126,048) 

2009 

Rs. '000 

13,517,254 

45,887,067 

59,404,321

SIGNIFICANT ACCOUNTING POLICIES 

1. CORPORATE INFORMATION 

Bank of Ceylon is a Government Corporation domiciled in Sri Lanka, duly incorporated on 01 August 1939 under 

the Bank of Ceylon Ordinance No. 53 of 1938. It is a licensed commercial bank established under the Banking 

Act No. 30 of 1988 and amendments thereto. The registered office of the Bank is situated at No. 4, Bank of 

Ceylon Mawatha, Colombo 01, Sri Lanka. The debentures issued by the Bank are listed on the Colombo Stock 

Exchange. 

The staff strength of the Bank as at 31 December 2010 was 8,204 (2009 - 7,538). 

The Consolidated Financial Statements of the Bank prepared for the year ended 31 December 2010 comprise the 

Bank (‘Parent’), its Subsidiaries (together referred to as the ‘Group’) and the Group’s interests in its Associate 

Companies. 

The Bank does not have an identifiable parent of its own. 

The Financial Statements for the year ended 31 December 2010 were authorised for issue on 16 March 2011 in 

accordance with a resolution of the Board of Directors passed on 16 March 2011. 

1.1 PRINCIPAL ACTIVITIES 

Bank 

The principal activities of the Bank during the year were commercial banking, personal banking, development 

financing, mortgage financing, lease financing, investment banking, Islamic banking, corporate financing, dealing 

in Government Securities, pawn broking, credit card facilities, off-shore banking, foreign currency operations and 

other financial services 

There have been no significant changes in the nature of these activities during the year. 

Subsidiaries 

The principal activities of Bank’s Subsidiaries are as follows: 

Name of Company Principal Activity 

Property Development PLC Maintain, manage, develop and sustain the utility and value of Bank 

of Ceylon Head Office Building 

Merchant Bank of Sri Lanka PLC Leasing and hire purchase, trade finance, corporate advisory services, 

fund Management capital market activities, corporate secretarial and 

legal services 

BoC Management and Support Provides management services 

Services (Private) Limited 

BoC Property Development and Renting of office space of BoC Merchant Tower in Colombo 03 

Management (Private) Limited Ceybank House in Kandy 


108

BoC Travels (Private) Limited Engages in travel related services 

Hotels Colombo (1963) Limited Provides hotel services 

Merchant Credit of Sri Lanka Limited Acceptance of deposits, granting lease facilities, hire purchase, loans 

and other credit facilities, pawning and real estate developments and 

related services 

Ceylease Financial Services Limited Granting finance lease, hire purchase, commercial loan facilities and real 

estate developments and sales 

Ceybank Holiday Homes (Private) Managing, operating, maintaining and conducting Pilgrims, Rests, 

Limited Hotels and Guest Houses in Sri Lanka 

MBSL Insurance Company Limited Offers Life and General Insurance Products 

Koladeniya Hydropower (Private) Hydropower generation 


Bank of Ceylon (UK) Limited Provides financial services including accepting deposits and 

dealing in investments 

There have been no significant changes in the nature of principal activities of Subsidiaries during the year under 

review other than for engaging in hydropower generation through acquisition of Koladeniya Hydropower (Private) 

Limited to the Group. 

Associates 

The principal activities of Bank’s Associates are as follows: 

Name of Company Principal Activity 

Ceybank Asset Management (Private) Limited Management of Unit Trust Funds and other private 

portfolios 

Southern Development Financial Company Limited Granting loan facilities 

Lanka Securities (Private) Limited Equity trading, debt trading and placements 

Purchasing, hiring and acquiring real estate properties 

Mireka Capital Land (Private) Limited real estate developments and providing 

Infrastructurefacilities to real estate 

development projects 


109

Transnational Lanka Records Solutions (Private) Real estate - renting out properties 


MBSL Savings Bank Limited Provides financial services including accepting 

deposits leasing, hire purchase and pawning 

There have been no significant changes in the nature of principal activities of Associates during the year 

2. DIRECTORS’ RESPONSIBILITY FOR FINANCIAL STATEMENTS 

The Board of Directors is responsible for the preparation and presentation of the Financial Statements of the 

Bank in terms of the provisions of the Bank of Ceylon Ordinance and its amendments read with the Banking 

Act No. 30 of 1988 and its amendments thereto and Sri Lanka Accounting Standards 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

3.1 BASIS OF PREPARATION 

The Financial Statements of the Bank and the Group encompassing the Balance Sheet, Income Statement, 

Cash Flow Statement, Statement of Changes in Equity, Accounting Policies and the Notes thereto are 

prepared in conformity with Accounting Standards issued by The Institute of Chartered Accountants of Sri 

Lanka and on the basis of historical cost convention except otherwise stated as required by the above 

Standards, which have been applied consistently with that of the previous year. Except as indicated, the 

Financial Statements presented in Sri Lankan Rupees have been rounded to the nearest thousand. No 

adjustment has been made for inflationary factors affecting the Financial Statements except on certain land 

and buildings, investment properties and dealing securities. 

3.2 ESTIMATES AND MANAGEMENT JUDGMENTS 

The preparation of Financial Statements requires management to make judgments, estimates and 

assumptions that affect the application of policies and reported amount of assets and liabilities, 

income and expenses. The estimates and associated assumptions are based on historical experience 

and various other factors that are believed to be reasonable under the circumstances. 

The estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates 

are recognised in the period in which the estimates are revised and/or in future periods if the revision 

affects future periods too. 

Key items which involve these judgments, estimates and assumptions are discussed below: 

Defined Benefit Plans 

The cost of defined benefit plans, gratuity and pension obligation is determined by using actuarial 

valuations. It involves making assumptions about discount rates, expected rates of return on planned 

assets, attrition rate, future salary increases, future cost of living allowances and future pension 

increases. All assumptions are reviewed at each reporting date due to uncertainty. 

Impairment on Loans and Advances 

In addition to the provisions made for possible losses on loans and advances based on the parameters 

given in the Sri Lanka Accounting Standard No. 23 on ‘Revenue Recognition and Disclosures in the 


110

Financial Statements of Banks’ and Directives issued by the Central Bank of Sri Lanka, the Group reviews 

its loans and advances portfolio at each reporting date or more frequently, if events or changes are in 

existence, which require to asses whether a further provision for impairment is required against exposures. 

The judgments by the management are required in the estimation of these amounts and such estimations 

are based on the number of factors such as any deterioration of countries, industry and technological 

obsolescence, borrowers’ financial situation. 

Impairment of Other Assets 

The Group assesses on each Balance Sheet date or more frequently to determine whether there is objective 

evidence that an asset is impaired. This requires the management to make an estimate of expected future 

cash flows, suitable discount rates in order to arrive at the present value of future cash flows, which can be 

derived from a particular asset. 

3.3 MATERIALITY AND AGGREGATIONS 

Each material class of similar items is presented separately in the Financial Statements. Items of a dissimilar 

nature or function are presented separately unless they are immaterial as permitted by the Sri Lanka 

Accounting Standard No. 03 (Revised 2005) on ‘Presentation of Financial Statements’. 

3.4 STATEMENT OF COMPLIANCE 

The Financial Statements of the Bank and its Subsidiaries are prepared in accordance with the Sri Lanka 

Accounting Standards (SLASs) laid down by The Institute of Chartered Accountants of Sri Lanka and 

comply with the requirements of Bank of Ceylon Ordinance and Banking Act No. 30 of 1988 and 

amendments thereto. In the case of Financial Statements of Subsidiaries in addition to the above, they 

comply with Companies Act No. 07 of 2007, Finance Leasing Act No. 56 of 2000, Finance Companies Act 

No. 78 of 1988, Insurance Industry Act No. 43 of 2000 and provisions of International Financial Reporting 

Standards (IFRSs). The Financial Statements of the Bank and its Subsidiaries present fairly the financial 

position, financial performance and cash flows. 

3.5 FOREIGN CURRENCY TRANSLATION 

Functional and Presentation Currency 

Items in the Financial Statements of the Bank and each of its Subsidiaries are translated using their 

functional currency, being the currency of the primary economic environment in which the entity operates. 

The Consolidated Financial Statements are presented in Sri Lankan Rupees, which is the functional and 

presentation currency of the Bank and except for Bank of Ceylon (UK) Limited whose functional currency is 

Sterling Pounds. 

3.5.1 Foreign Currency Transactions 

Transactions in foreign currencies are measured at the exchange rate ruling at the date of the 

transaction. 

Monetary assets and liabilities denominated in foreign currencies are translated into Sri Lankan Rupees 

at the exchange rate ruling at the Balance Sheet date. The resulting gains and losses from foreign 

exchange differences are accounted for in the Income Statement. 

Non-monetary assets and liabilities measured at cost in a foreign currency are translated using the 

exchange rate at the date of the transaction. Non-monetary assets and liabilities measured at fair value 

in foreign currencies are translated into Sri Lankan Rupees at the exchange rate ruling at the date the fair 

value was determined. 

3.5.2 Foreign Operations 

The results and financial position of the branches in India, Maldives and Bank of Ceylon (UK) Limited whose 

functional currency is not Sri Lankan Rupees are translated into Sri Lankan rupees as follows: 


111

Assets and liabilities are translated at the exchange rate ruling at the Balance Sheet date. 

Income and expenses in the Income Statement are translated at an average exchange rate approximating the 

exchange rates at the dates of the transactions, and in the case of income and expenses of overseas branches, 

the monthly average exchange rates are applied for translation. 

Resulting exchange differences are recognised in the foreign currency translation reserve, which is a separate 

component of equity. 

When a foreign operation is disposed, the deferred cumulative translation gain or loss recognised in Equity relating to 

that particular foreign operation is recognised in the Income Statement as part of the gain or loss on disposal. 

Forward exchange contracts are valued at the forward market rates ruling on the date of the Balance Sheet. 

Resulting net unrealised gains and losses are dealt with through the Income Statement. 

3.5.3 Consolidation Adjustments 

On consolidation, foreign exchange differences arising from the translation of net investments in foreign 

entities, as well as any borrowings and instruments designated as foreign currency hedges of such 

investments are taken to capital reserves. 

3.6 BASIS OF CONSOLIDATION 

The Bank’s Financial Statements comprise the consolidation of the Financial Statements of the Domestic 

Banking Unit, the Off-shore Banking Unit and the foreign operations that are integral to the Bank. The Group 

Financial Statements comprise consolidation of the Financial Statements of the Bank, its Subsidiaries in 

terms of the Sri Lanka Accounting Standard No. 26 (Revised 2005) on ‘Consolidated and Separate Financial 

Statements’ and in terms of the Sri Lanka Accounting Standard No. 27 (Revised 2005) on ‘Investments in 

Associates’. 

3.6.1 Subsidiaries 

Subsidiaries are those companies in which the Bank, directly or indirectly, has an interest of more than onehalf 

of the voting rights or has control over the financial and operating policies. 

Subsidiaries are consolidated from the date on which effective control is transferred to the Bank and are no 

longer consolidated from the date of disposal. 

The Consolidated Financial Statements are prepared to common financial year end of 31 December. The 

accounting policies of the Subsidiaries have been changed wherever necessary to comply with the Bank’s 

accounting policies. There are no significant restrictions on the ability of Subsidiaries to transfer funds to Parent 

in the form of cash dividends or to repay loans and advances. All Subsidiaries of the Bank have been 

incorporated in Sri Lanka except for Bank of Ceylon (UK) Limited, which is incorporated in the United 

Kingdom. 

A listing of the Bank’s Subsidiaries is given in Note 27 to the Financial Statements. Separate disclosure is 

made in respect of minority interest. 

3.6.2 Associates 

Associates are entities in which the Group has significant influence, but not control, and generally holds a 

shareholding of between and including 20% and 50% of the voting rights. 

The Group’s investments in Associates are accounted for using Equity Method and initially carried at cost. 

The carrying amount is increased or decreased to recognise the Group’s share of net assets of the Associate, 


112

less any impairment in value after the date of acquisition. Where the Group’s share of losses in an Associate 

equals or exceeds its interest in the Associate, including any unsecured receivables, the Group does not 

recognise further losses, unless it has incurred obligations or made payments on behalf of the Associate. The 

Group discontinues the use of Equity Method from the day that it ceases to have significant influence over an 

Associate and accounts for the investment in accordance with the Sri Lanka Accounting Standard No. 22 on 

‘Accounting for Investments’. 

The reporting dates of the Group and the Associates are identical and there are no significant restrictions on 

the ability of Associates to transfer funds to Parent in the form of cash dividends or to repay loans and 

advances. The results of the Associates are taken from the latest audited accounts or unaudited management 

accounts of the Associates prepared at dates not more than three months prior to the end of the financial 

year of the Group. 

A listing of the Bank’s Principal Associates is shown in Note 26 to the Financial Statements. 

3.6.3 Business Combinations and Goodwill 

Business combinations are accounted for using the Purchase Method of Accounting as per the 

requirements of the Sri Lanka Accounting Standard No. 25 (Revised 2004) on ‘Business Combinations’. This 

involves recognizing identifiable assets and liabilities of the acquired business at fair value. Any excess of the 

cost of acquisition over the fair values of the identifiable net assets acquired, is recognised as goodwill. If the 

cost of acquisition is less than the fair values of the identifiable net assets acquired, the difference is 

identified as discount on acquisition and is recognised directly in the Income Statement in the year of 

acquisition. 

Goodwill acquired in a Business Combination is initially measured at cost, being the excess of the cost of the 

Business Combination over the Bank’s interests in the net fair value of the identifiable assets, liabilities 

including contingent liabilities acquired. Sri Lanka Accounting Standard No. 25 (Revised 2004) on ‘Business 

Combinations’ requires that following the initial recognition, goodwill is to be measured at cost, less any 

accumulated impairment losses and goodwill to be reviewed for impairment annually or more frequently if 

events or changes in circumstances indicate that the carrying value may be impaired. The acquired goodwill is 

written-off in full in the year of acquisition. 

When Subsidiaries/Associates/other business units are sold, the difference between the selling price and the 

net assets plus cumulative translation differences and unimpaired goodwill, if any, is recognised in the 

Income Statement in the year of disposal. 

3.6.4 Transactions Eliminated on Consolidation 

All intra-group transactions, balances, income and expenses are eliminated on consolidation. Unrealised gains 

and losses resulting from transactions between the Group and its Associates are also eliminated on 

consolidation to the extent of the Group’s interests in the Associates. Where necessary, adjustments are made to 

the Financial Statements of Subsidiaries to bring the Accounting Policies used in line with those used by the 

Group. 

3.7 TAXATION 

Provision for taxation comprises current and deferred tax and Social Responsibility Levy. Provision 

for taxation is recognised in the Income Statement except to the extent that it relates to items recognised 

directly in equity, in which case it is recognised in equity. Provision for taxation on the overseas operations is 

made on the basis of the profit for the year as suggest for taxation purposes in accordance with the 

provisions of the relevant regulations in the respective country. 

3.7.1 Current Taxation 

Provision for taxation on Sri Lankan operations is made on the basis of the net profit for the year as adjusted 

for taxation purposes in accordance with the provisions of the Inland Revenue Act No. 10 of 2006 and the 

amendments thereto. Provision for taxation on the overseas branches is made on the basis of the net profit 

for the year as adjusted for taxation purposes in accordance with the provisions of the relevant statutes in 


113

those countries. 

3.7.2 Deferred Taxation 

Deferred tax is provided in full, using the Liability Method, on temporary differences arising between the tax 

bases of assets and liabilities and their carrying amounts in the Financial Statements. Deferred tax liabilities 

are recognised for all taxable temporary differences, except: 

Liabilities arising from goodwill for which amortisation is not deductible for tax purposes. 

Liabilities arising from the initial recognition of an asset/liability other than in business combinations 

which, at the time of transaction, does not affect either the accounting or taxable profit. 

Deferred tax assets are recognised for all deductible temporary differences, unused tax losses to the extent 

that it is probable that taxable profit will be available against, which the deductible temporary differences can 

be utilised, except: 

Negative goodwill, which was treated as deferred income under business combinations. 

The initial recognition of an asset/liability other than in a business combination which, at the time of 

transaction, does not affect the accounting or taxable profit. 

The carrying amount of deferred tax asset is reviewed at each Balance Sheet date and reducedto the extent 

that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part or all 

of that deferred tax assets to be utilised. Any such reduction should be subsequently reversed to the extent 

that it becomes probable that sufficient taxable profit would be available. 

Deferred tax assets and liabilities are measured at the tax rate that are expected to apply in the year when the 

assets are realised or the liabilities are settled, based on tax rates and tax laws that have been enacted or 

substantially enacted at the Balance Sheet date. 

Current tax and deferred tax relating to items recognised directly in equity are also recognised in equity. 

Deferred tax assets and liabilities are set off if a legally enforceable right exists to set off current tax assets 

against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation 

authority. 

3.7.3 Value Added Tax (VAT) on Financial Services 

During the year, the Bank’s total value addition was subjected to a 20% Value Added Tax as per Section 25 

(a) of the Value Added Tax Act No. 14 of 2002 and amendments thereto. 

3.7.4 Economic Service Charge (ESC) 

In terms of the provisions of the Economic Service Charge Act No. 13 of 2006, ESC is payable on the liable 

turnover at specified rates. ESC paid is deductible from the income tax liability. Any unclaimed liability can be 

carried forward and set off against the income tax payable for a further four years. 

3.7.5 Social Responsibility Levy (SRL) 

In terms of the provisions of the Finance Act No. 05 of 2005, as amended by theFinance Act No. 11 of 

2006, SRL is payable at the rate of 1.5% on all taxes and levies chargeable as specified in the First 

Schedule of the Act. 

3.7.6 Withholding Tax on Dividends 

Dividend distributed out of taxable profit of the Subsidiaries and Associate Companies attracts a 10% 

deduction at source and is not available for set off against the tax liability of the Bank. Thus, the withholding 

tax deducted at source is added to the tax expense in preparing the Consolidated Financial Statements as a 

consolidation adjustment. 


114

4. ASSETS AND BASIS OF THEIR VALUATION 

4.1 LOANS AND ADVANCES, FINANCE LEASES AND CREDIT CARD RECEIVABLE 

4.1.1 Loans and Advances 

All loans and advances are recognised when cash is advanced to borrowers. Loans and advances are stated 

in the Balance Sheet net of provisions for loan losses and net of interest, which is not accrued to revenue. 

4.1.2 Finance Leases 

Assets leased to customers, which transfer substantially all the risks and rewards associated with ownership 

other than legal title for a specific period are accounted for as finance leases. 

Lease receivables are stated in the Balance Sheet net of initial rentals received, unearned lease income and 

provision for rentals doubtful of recovery. 

4.1.3 Credit Card Receivable 

Amounts receivable on credit cards are included in advances to customers at the amounts expected to be 

recovered. 

4.2 NON-PERFORMING LOANS AND PROVISION FOR LOAN LOSSES 

4.2.1 (a) Non-Performing Loans 

Loans and advances, which are in arrears of due capital and/or interest are classified as non-performing as 

per the Direction No. 03 of 2008 on ‘Classification of Loans and Advances, Income Recognition and 

Provisioning’, as amended by the Direction No. 09 of 2008 on ‘Amendments to Directions on Classification 

of Loans and Advances, Income Recognition and Provisioning for Licensed Commercial Banks in Sri Lanka’ 

issued by the Central Bank of Sri Lanka. 

4.2.1 (b) Foreclosed Properties 

Foreclosed properties represent properties that are acquired in full or partial settlement of debts. These 

properties are classified as non-performing advances and accounted for at the lower of cost or market value 

on an individual property basis. The shortfall between the market value of the foreclosed properties and the 

related loan outstandingis recognised as a provision for loan losses in the Income Statement. Foreclosed 

properties are not subject to depreciation. 

Subsequent gains and losses on the disposal of the foreclosed properties are taken into account in 

determining operating profits. 

4.2.2 Provision for Loans, Advances and Finance Leases 

4.2.2 (a) Provision for Non-Performing Loans and Advances 

Provisions for non-performing loans and advances are made on the basis of continuous 

review of all loans and advances in accordance with Sri Lanka Accounting Standard No23 on‘Revenue 

Recognition and Disclosures in the Financial Statements of Banks’ and the regulations imposed by the 


Accordingly, specific provisions have been made as follows: 


115

Period outstanding Classification rovision made net of realisable value of 

the security 

3 to 6 months Special mention - 

6 to 12 months Substandard 20% 

12 to 18 months Doubtful 50% 

18 months and over Loss 100% 

Additional provisions have also been made over and above the minimum percentages specified above, on a 

case-by-case basis depending on the risk associated with such loans. 

When a loan is deemed uncollectible, it is written-off against the related provision for impairments. 

Subsequent recoveries are credited to the Income Statement. 

In addition, the value of the security is determined on the ‘Hair Cut Rule’ imposed by the Central Bank of Sri 

Lanka, i.e., the extent up to which the Forced Sale Value (FSV) of immovable property can be counted as the 

value of security (which is given below) in calculating the provisioning for non-performing advances 

Item % of FSV of immovable 

property that can be considered 

as the net value of security 


116 

Freehold Leasehold 

property property 

For the advances in the substandard and doubtful category 75 60 

For the Advances in the Loss Category 

Less than 12 months 75 60 

More than 12 months but less than 24 months 60 50 



More than 48 months 40 Nil 

4.2.2 (b) Provision for Lease Rentals Receivable in Arrears 

When the rental is in arrears over a consecutive period of 90 days, the specific provision is made as 

follows: 

Period of outstanding Classification Provision 

90 - 180 days Special mention - 

Over 180 days Loss 100%

Category Provision 

A 100% of capital outstanding of lease assets minus 50% of the invoice 

value/condition and valuation report whichever is lower, net of upfront 

rentals and cash security obtained,if any. 

B 100% of capital outstanding net of upfront rentals and cash security obtained, if any. 

Category A - Identified at the time of termination of lease contract. 

Category B - Identified at the time of loss of the assets 

4.2.2 (c) Provision for Credit Card Receivable 

When the required minimum payment is in arrears on credit card receivable, specific provision is made as 

follows: 

Period of outstanding Classification Provision 

3 - 4 months Special mention - 

4 - 6 months Substandard 25% 

6 - 8 months Doubtful 50% 

Over 8 months Loss 100% 

4.2.2 (d) Provision for Pawning 

A 100% specific provision is made for the total amount advanced for unsold articles at every auction. 

4.2.2 (e) Provision for Regular Advances 

Apart from specific provisions, the Bank also carried general provision of 1% on total performing and 

overdue loans and advances for credit losses to absorb all losses inherent in its loan portfolio including 

credit card receivable, lease rentals receivable, and pawning upto 30 September 2010. 

According to the Banking Act Direction No. 03 of 2010, ‘Amendments to Direction on Classification of Loans 

and Advances, Income Recognition and Provisioning for Licensed Commercial Banks in Sri Lanka’, banks shall 

maintain general provision of 0.5% of total outstanding of on Balance Sheet performing loans and advances 

and total outstanding of special mention on-Balance Sheet credit facilities net of interest in suspense 

commencing from 01 January 2012. In order to fulfil the above requirement, the banks shall reduce 0.1% per 

quarter during the five quarters commencing 01 October 2010 to arrive at the statutory requirement. 

Accordingly, the Bank has reduced the general provision to 0.9% on total performing and overdue loans and 

advances as at 31 December 2010 (1% as at 31 December 2009). 

4.2.3 Write-off Policy of the Bank 

The Bank writes off a loan net of related loan loss provisions when it determines that the loan is 

uncollectible. This decision is made when the borrower can no longer pay or the proceeds from collateral is 

not sufficient to pay back the entire obligation 

4.3 INVESTMENTS 


117

4.3.1 Investments in Subsidiaries 

Investments in Subsidiaries are accounted for under the Cost Method of accounting in the Bank’s Financial 

Statements in accordance with the Sri Lanka Accounting Standard No. 26 (Revised 2005) on ‘Consolidated 

and Separate Financial Statements’. Accordingly, investments in Subsidiaries are stated in the Bank’s Balance 

Sheet at cost, less impairment losses, if any. 

4.3.2 Investments in Associates 

Investments in Associates are accounted for under the Cost Method in the Bank’s Financial Statements and 

under the Equity Method in the Group’s Financial Statements in accordance with the Sri Lanka Accounting 

Standard No. 27 (Revised 2005) ‘Investment in Associates’. 

In the Bank’s Balance Sheet, investments in Associates are stated at cost, less impairment losses, if any. 

Under the Equity Method, the investments in Associates are initially accounted for at cost and the carrying 

amount is adjusted for post-acquisition changes in the Bank’s share of net assets of the Associates, less any 

impairment. 

4.3.3 Dealing Securities 

These are marketable securities acquired and held with the intention of resale over a short period of time. Such 

securities are initially measured at cost and subsequently marked to market and carried at market value in the 

Balance Sheet. Any gains/ losses on marked to market valuation are dealt with through the Income Statement 

4.3.4 Investment Securities 

These are acquired and held for yield or capital growth in the medium or long term with the positive intent 

and ability to hold until maturity. Such securities are recorded at cost in accordance with Sri Lanka 

Accounting Standard No. 22 on ‘Accounting for Investments’. Changes in market values of these securities 

are not taken into account, unless there is considered to be diminution in value, which is other than 

temporary. 

4.3.5 Non-Current Assets Held for Sale 

These are investments classified as held for sale as at the Balance Sheet date. The Bank inteto recover the 

value of these assets, principally through a sales transaction rather than continuing to hold. These are 

assets which are available for immediate sale in their present condition, subject to only the terms that are 

usual and customary for sale of such assets and where sale is highly probable. These assets are measured 

at the lower of the carrying amount and fair value less costs to sell, as per the Sri Lanka 

Accounting Standard No. 38 (Revised 2006) on ‘Non-current Assets Held for Sale and Discontinued 

Operations’. 

4..4 PROPERTY, PLANT & EQUIPMENT 

The Group applies the requirements of the Sri Lanka Accounting Standard No. 18 (Revised 2005) on 

‘Property, Plant & Equipment’ in accounting for its own assets which are held for and used in the provision of 

services, for rental to others or for administrative purposes and are expected to be used more than one year. 

4.4.1 Basis of Recognition 

Property,plant & equipment are recognised ifit is probable that future economic benefits associated with 

the assets will flow to the Group and the cost of the asset can be reliably measured. 

4.4.2 Measurement 

An item of property, plant & equipment that qualifies for recognition as an asset is initially measured at its 

cost of purchase directly attributable to the acquisition of the asset or construction or valuation together with 

any incidental expenses thereon. 

The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly 

attributable to bringing the asset to a working condition for its intended use and the costs of dismantling 

and removing the items and restoring the site on which they are located. Purchased software that is integral 


118

to the functionality of the related equipment is capitalised as part of the computer equipment. 

4.4.3 Cost Model 

The Group applies Cost Model to plant & equipment and records at cost of purchase or construction 

together with any incidentalexpenses thereon, less accumulated depreciation and any accumulated 

impairment losses. 

4.4.4 Revaluation Model 

The Group applies the Revaluation Model for the entire class of freehold land and buildings. Such properties 

are carried at a revalued amount,being their fair value at the date of revaluation, less any subsequent 

accumulated depreciation and subsequent accumulated impairmentlosses. Freehold land and buildings of the 

Bank are revalued every seven years on a roll over basis to ensure that the carrying amounts donot 

differ materially from the fair values at the Balance Sheet date. On revaluation of an asset, any increase 

in the carrying amount is credited directly to equity, under capital reserve or used to reverse a previous 

revaluation decrease relating to the same asset, which was debited to the Income Statement. In 

this circumstance, the increase is recognised as income to the extent of the previous writtendown. 

Any decrease in the carrying amount is recognized as an expense in the Income Statement or 

debited directly to equity under revaluation reserve to the extent of any credit balance existing in the 

capital reserve in respect of that asset. When a revalued asset is disposed off, any revaluation surplus 

willbe transferred directly to retained earnings. 

4.4.5 Subsequent Costs 

The cost of replacing part of an item of property, plant & equipment is recognised in the carrying amount of 

the item if it is probable that the future economic benefits embodied within that part will flow to the Group 

and its cost can be reliably measured. 

4.4.6 Restoration Costs 

The cost incurred on repairs or maintenance of property, plant & equipment in order to restore or maintain 

future economic benefits is charged to Income Statement as incurred. 

4.4.7 Derecognition 

The carrying amount of an item of property, plant & equipment is derecognised on disposal or when no 

future economic benefits are expected from its use or disposal. The gain or loss arising from the 

derecognition of an item of property, plant & equipment is included in the Income Statement when the item 

is derecognised. 

When replacement costs are recognised in the carrying amount of an item of property, plant & equipment, 

the remaining carrying amount of the replaced part is derecognised. 

4.4.8 Depreciation 

The Group provides depreciation on straight-line basis over the periods appropriate to the estimated useful 

lives of the different types of assets. 

Provisioning for depreciation of property, plant & equipment is made on pro-rata basis. 

The depreciation on domestic assets is determined using the following estimated useful lives: 


119

Freehold Building Over 40 years 

Office Equipment Over 08 years 

Furniture & Fittings Over 08 years 

Computer Equipment Over 05 years 

Motor Vehicles Over 04 years 

The future economic benefits embodied in the assets that are used by overseas business operations are different 

from those used domestically in terms of the asset’s expected utility. 

Accordingly, the depreciation on assets belonging to overseas operations are determined using the following 

estimated useful lives: 

Freehold Building Over 50 years 

Freehold/Leasehold 

Refurbishment Over 10 years 

Office Equipment & 

Computers Over 05 years 

Furniture & Fittings Over 10 years 

The asset’s residual value, useful life and method of depreciation are reviewed at each Balance Sheet date to 

change estimates. 

4.4.9 Capital Work-In-Progress 

Capital work-in-progress is stated at cost. These are expenses of a capital nature directly incurred in the 

construction of buildings, major plant and machinery and system development, awaiting capitalisation. 

4.4.10 Borrowing Costs 

Borrowing costs that are directly attributable to the acquisition, construction or production of aqualifying 

asset have been capitalised as part of the cost of the asset in accordance with the Sri Lanka Accounting 

Standard No. 20 on ‘Borrowing Costs’. Capitalisation of borrowing costs ceases when substantially all the 

activities necessary to prepare the qualifying asset for its intended use are completed. 

4.5 LEASEHOLD PROPERTY 

Leasehold properties are recorded at carrying value in terms of the Sri Lanka Accounting Standard No. 19 

(Revised 2005) on ‘Leases’. 

The carrying value of leasehold properties is amortised over the remaining lease term or useful life of 

leasehold property, whichever is lower. Subsequent revaluations are not carried out for leasehold properties. 


120

4.6 INTANGIBLE ASSETS 

The Group applies the requirements of the Sri Lanka Accounting Standard No. 37 on ‘Intangible Assets’ in 

accounting for intangible assets. 


An intangible asset is recognised if it is probable that the future economic benefits that are attributable to the 

asset will flow to the entity and the cost of the assets can be measured reliably. 


4.6.2 (a) Software 

Software represents the value of computer application software licensed for use of the Group, other than 

software applied to the operation software system of computers. Intangible assets are carried at its cost, 

less accumulated amortisation and any impairment losses. 

The initial costs comprise licence fees paid at the time of purchase, duties/levies and also other directly 

attributable expenditure that are incurred in customising the software for its intended use. 

4.6.2 (b) Goodwill 

Goodwill arising on the acquisition represents the excess of the cost of acquisition over the 

Group’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent 

liabilities at the date of acquisition. According to the Sri Lanka Accounting Standard No. 25 (Revised 2004) 

on ‘Business Combinations’, goodwill is no longer amortised. Instead, goodwill is tested for impairment 

annually and assessed for any indication of impairment at each reporting date to ensure that its carrying 

amount does not exceed its recoverable amount. If an impairment loss is identified, it will be recognised 

immediately in the Income Statement. 

The negative goodwill is recognised immediately in the Income Statement. 

4.6.3 Subsequent Expenditure 

Expenditure incurred on software is capitalised only when it enhances and extends the economic benefits of 

computer software beyond their original specifications and lives and such cost is recognised as capital 

improvement and added to the original cost of software. 

4.6.4 Amortisation 

Intangible assets except for goodwill are amortised using the straight-line method over the estimated useful 

life of five years commencing from the date the application software is available for use over the best 

estimate of its useful economic life. 

The unamortised balances of software with finite lives are reviewed for impairment whenever there is an 

indication for impairment and recognised as expenses in the Income Statement to the extent that they are no 

longer probable of being recovered from the expected future benefits. 


Intangible assets are derecognised when it reveals that they will not generate economic benefits or 

circumstances indicate that the carrying value is impaired. 

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the 

net disposal proceeds and the carrying amount of the assets and are recognised in the Income Statement. 

4.7 INVESTMENT PROPERTIES 

The Group applies the requirements of the Sri Lanka Accounting Standard No. 40 (Revised 2005) on 


121

‘Investment Property’, in accounting for investment properties. 


Investment property is property that is held to earn rentals or for capital appreciation or both and the future 

economic benefits that are associated with the investment property but not for sale in the ordinary course of 

business. 


Investment property is accounted for under Cost Model in the Financial Statements. Accordingly, after 

recognition as an asset, the property is carried at its cost, less accumulated depreciation and impairment 

losses. 

4.7.3 Depreciation 

Depreciation is provided on a straight-line basis over the estimated life of the class of asset from 

the date of purchase up to the date of disposal. 


Investment properties are derecognised when disposed of, or permanently withdrawn from use because no future 

economic benefits are expected. Transfers are made to and from investment property only when there is a change in 

use. 

The gain/loss on disposal is calculated as the difference between the net disposal proceeds and the carrying amount 

of the asset and is recognised as income or expense in the Income Statement. 

4.8 IMPAIRMENT OF ASSETS 

The carrying amounts of the Group’s assets are reviewed at each reporting date to determine whether there 

is objective evidence of impairment. If any such evidence exists, the carrying amount of a particular asset or 

portfolio of assets is reduced to the estimated recoverable amount by means of a charge to the Income 

Statement, in those expense categories consistent with the function of the impaired asset or portfolio of 

assets, except for property previously revalued where the revaluation was taken to equity. In this case, the 

impairment is also recognised in equity up to the amount of any previous revaluation 

The recoverable amount of an asset is the higher of its net selling price and value in use. The net selling price 

is the fair value of an asset or cash-generating unit, less costs to sell. In determining the value in use, the 

estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects 

current market assessments of the time-value of money and the risks specific to the assets. Impairment 

losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any 

goodwill allocated to the cash-generating unit and then, to reduce the carrying amount of the other assets in 

the unit. 

An assessment is made at each reporting date as to whether there is any indication that previously 

recognised impairment losses may no longer exist or may have decreased. If such indication exists, the 

Group makes an estimate of the recoverable amount. Previously recognised impairment losses other than in 

respect of goodwill are reversed only if there has been a change in the estimates used to determine the 

asset’s recoverable amount since the last impairment losses were recognised. If that is the case, the carrying 

amount of the asset is increased to its recoverable amount. Such reversal is recognised in the Income 

Statement unless the asset is carried at the revalued amount, in which case, the reversal is treated as a 

revaluation increase. 

4.9 SECURITIES PURCHASED UNDER RE-SALE AGREEMENTS (REVERSE REPOS) 

Securities purchased under re-sale agreements are treated as collateralised lending and recorded at the 

consideration paid and interest accrued thereon. The amount lent is shown as an asset either as loans and 

advances to customers or loans to other banks. 

The difference between purchase price and re-sale price is treated as interest received and accrued evenly 

over the life of Repo agreement. 


122

4.10 GOVERNMENT OF SRI LANKA TREASURY BILLS, BONDS AND OTHER SECURITIES 

4.10.1 Investments that are held for trading 

Investments in Treasury Bills and Treasury Bonds that are acquired for the purpose of short-term selling (held 

for trading) are marked to market and carried at that value in the Balance Sheet. Gains and losses on marked 

to market valuation are dealt with through the Income Statement 

4.10.2 Investments that are held to Maturity 

Investments in Treasury Bills and Treasury Bonds that the Bank intends and is able to hold to maturity are 

reflected at the value of the Bonds/ Bills purchased and the discount/premium accrued thereon. Discounts 

received/premia paid are taken to the Income Statement based 

on a pattern reflecting a constant periodic rate of return. 

5. LIABILITIES AND PROVISIONS 

5.1 DEPOSITS FROM CUSTOMERS 

Deposits from customers include non-interest bearing deposits, savings deposits, term deposits, 7 days’ call 

deposits and certificate of deposits. They are stated in the Balance Sheet at amounts payable. Interest 

paid/payable on these deposits is charged to the Income Statement. 

5.2 BORROWED FUNDS 

Borrowed funds include call money borrowings, refinance borrowings and other term borrowings from banks. 

They too are stated in the Balance Sheet at amounts payable. Interest paid/payable on these borrowings is 

charged to the Income Statement. 

5.3 SECURITIES SOLD UNDER RE-PURCHASE AGREEMENTS (REPOS) 

Securities sold under re-purchase agreements (‘Repos’) are treated as collateralised borrowings 

and stated at the consideration received and interest accrued thereon. These are retained in the Financial 

Statements and the counter-party liability is accounted for as a liability and classified under debt securities in 

issue. 

The difference between sale and re-purchase price is treated as interest paid and accrued evenly over the life 

of the Repo period. 

5.4 DEBENTURES 

These represent the funds borrowed by the Group for long-term funding requirements, from the public 

issues and through private placements. These are recorded in the Balance Sheet at amounts expected to be 

payable at the Balance Sheet date. 

5.5 OTHER LIABILITIES 

Other liabilities comprise of interest, fees, expenses payable and other provisions. These liabilities are recorded at the 

cash value to be paid. 

5.6 DEFINED BENEFIT PLANS 

5.6.1 Bank of Ceylon Pension Trust Fund 

The ‘Bank of Ceylon Pension Trust Fund’ is a funded, non-contributory, defined retirement benefit plan, 

operated for the payment of pensions until death to the permanent employees who have completed a 


123

minimum of ten years of continuous service with the Bank, at their retirement on reaching the retirement age 

on or after 55 years or on medical grounds, before reaching retirement age. The pension is computed as a 

percentage of the last drawn salary excluding certain allowances. 

Contributions to the Pension Trust Fund are made monthly, based on the advice of a qualified actuary, 

currently at 56.76% of gross salary for employees who joined the Bank prior to 01 January 1996. Employees 

who joined the Bank on and after 01 January 1996 may contribute 20% of their gross salary to a Pension 

Fund in which event the Bank contributes 5%. This arrangement is tentatively pending until the 

formulation of a contributory pension scheme is finalised. 

The fund is actuarially valued by a qualified actuary once in three years. 

The Subsidiaries do not operate Pension Funds. 

5.6.2 Bank of Ceylon Widows’/Widowers’ and Orphans’ Pension Fund 

The Bank is liable for and guarantees the payments to the beneficiaries of the ‘Bank of Ceylon 

Widows’/Widowers’ and Orphans’ Pension Fund’ to which the Bank’s employees monthly contribute 8% of 

their gross salary. The Bank’s liability towards the beneficiaries of the employees arises when an employee 

who has contributed to the fund for five continuous years dies while in service or on the death of a pensioner 

where the Bank will be liable to pay a monthly Widows’/Widowers’ and Orphans’ Pension to his/her 

beneficiaries. The pension to beneficiaries of an employee who dies while in service is based on the last 

drawn salary excluding certain allowances. 

The fund is actuarially valued by a qualified actuary once in three years. Funding would be done in consultation 

with the Actuary, Trustees and Beneficiaries. Currently, the Bank contributes a sum of Rs. 456 million per annum 

to meet the deficit as recommended by the Actuary. 

Both the Pension Fund and the Widows’/ Widowers’ and Orphans’ Pension Fund are approved by the 

Government and are independently administered. 

5.6.3 Provision for Gratuity 

Provision has not been made in the Financial Statements for retirement gratuity payable under the Payment 

of Gratuity Act No. 12 of 1983, to employees who joined the Bank prior to 01 January 1996 as the Bank has 

its own non-contributory retirement benefit scheme in force. However, employees whose services are 

terminated other than by retirement are eligible to receive a terminal gratuity under the Payment of Gratuity 

Act No. 12 of 1983, at the rate of one-half of the basic or consolidated wage or salary, cost of living and all 

other allowances applicable to the last month of the financial year, for each year of continuous service. A 

provision is being made in these Financial Statements for retirement gratuities from the first year of service 

for all employees who joined the Bank on or after 01 January 1996, as they are not covered by the pension 

scheme of the Bank. 

In terms of the Sri Lanka Accounting Standard No. 16 (Revised 2006) on ‘Employee Benefits’, the Bank and 

its Subsidiaries have calculated the post-employment benefit obligations, based on the actuarial 

valuation method recommended in SLAS 16 and recognised that provision in the Income Statement. 

The Gratuity Liabilities are not externally funded. 

5.7 DEFINED CONTRIBUTION PLANS 

Contributions to defined contribution plans are recognised as an expense in the Income Statement as 

incurred. 

5.7.1 Bank of Ceylon Provident Fund 

All employees of the Bank are members of the ‘Bank of Ceylon Provident Fund’ to which the Bank 

contributes 12% of employees’ monthly gross salary excluding overtime, while employees contribute 8%. The 

Bank’s Provident Fund is an approved Fund, which is independently administered. 


124

5.7.2 Employees’ Provident Fund 

The Subsidiaries and their employees (other than Bank of Ceylon and its employees) contribute 12% (15% by 

Property Development PLC) and 8% respectively on salary of each employee to Employees’ Provident Fund, 

in terms of the Employees’ Provident Fund Act No. 15 of 1958 as amended. 

5.7.3 Employees’ Trust Fund 

All employees of the Bank and its Subsidiaries are members of the Employees’ Trust Fund to which 

Bank/Group contributes 3% of employees’ monthly gross salary excluding overtime, in terms of the 

Employees’ Trust Fund Act No. 46 of 1980. 

5.8 PROVISIONS FOR LIABILITIES 

A provision is recognised in the Balance Sheet when the Bank has a legal or constructive obligation as a 

result of a past event, and it is probable that an outflow of economic benefits will be required to settle the 

obligations, in accordance with the Sri Lanka Accounting Standard No. 36 on ‘Provisions, Contingent 

Liabilities and Contingent Assets’. 

6. INCOME STATEMENT 

6.1 REVENUE RECOGNITION - BANK AND NON-INSURANCE BUSINESS 

6.1.1 Interest Income from Loans and Advances 

Interest on loans and advances is accounted for in terms of the provisions of the Sri Lanka Accounting 

Standard No. 23 on ‘Revenue Recognition and Disclosures in the Financial Statements of Banks’. 

Accordingly, interest income from loans and advances is recognised on an accrual basis. Interest ceases to 

be accrued when the recovery of principal or interest is in arrears for more than 90 days. Interest 

income from non-performing loans and advances is accounted for on cash basis. Interest falling due on 

non-performing loans and advances is credited to interest in suspense account on memorandum basis. In 

addition, interest accrued upto three months on such non-performing loans and advances is also 

eliminated from the interest income and transferred to interest in suspense. 

6.1.2 Lease Income 

Lease income is accounted for in terms of the provisions of the Sri Lanka Accounting Standard No. 19 

(Revised 2005) on ‘Leases’. Accordingly, lease income is the interest component of the lease rentals of all 

finance leases receivable during the year. The excess to the aggregate rental receivable over the cost of the 

leased assets constitutes unearned income, which is taken into revenue over the term of the lease from the 

month in which the lease is executed,in proportion to the remaining receivable balance of the lease. Interests 

on finance leases cease to be accrued when they are in arrears for more than 90 days. Thereafter, such 

income is recognised on cash basis. 

6.1.3 Interest Income from Other Sources 

Interest income from securities issued by Government or Central Bank of Sri Lanka is recognised on a time 

proportionate basis as premia/discounts on purchase and amortised to income on a straight-line basis over 

the period to maturity. Income from all other interest-bearing securities is recognized on an accrual basis. 

6.1.4 Commission and Fee Income 

Commission and fee income mainly comprise fees receivable from customers for guarantees and other 

services provided by the Group, and fees for foreign and domestic payment tariff. Such income is recognised 

as revenue at the time the services are provided. 

6.1.5 Income on Discounting of Bills of Exchange 

Income on the endorsement of Bills of Exchange is recognised only when the bill is received and either 

issued or endorsed, and the payment under the particular instrument has been effected. 


125

6.1.6 Dividend Income 

Dividend income is recognised when the right to receive payment is established. 

6.1.7 Profit/Loss from Sale of Property, Plant & Equipment 

Profit/Loss arising from sale of property, plant & equipment is recognised in the period in which the sale 

occurs and is classified as other income. 

6.1.8 Gains or Losses arising from Investment Securities 

Gains or losses arising from the sale of equity shares, units, and financial instruments, including Treasury Bills sold prior 

to maturity, are accounted for on the date on which the transaction takes place. 

6.1.9 Rental Income 

Rental income is recognised on an accrual basis. 

6.1.10 Interest Expenses 

Interest expenses are recognised on an accrual basis. 

6.1.11 Operating Expenses 

All the expenses payable are recognised on an accrual basis in the Income Statement to the period to which 

they relate. 

6.2 GENERAL INSURANCE BUSINESS 

6.2.1 Gross Written Premiums 

Premium is generally recognised as written upon inception of the policy. Upon inception of the contract, 

premium is recorded as written and is earned primarily on a pro-rata basis over the term of the related policy 

coverage. However, for those contracts for which the period of risk differs significantly from the contract 

period, premium is earned over the period of risk in proportion to the amount of insurance protection 

provided. 

6.2.2 Reinsurance Premium 

Reinsurance premium expense is accounted for in the same accounting period as the Gross Written 

Premium to which it relates or in accordance with the pattern of reinsurance services received. 

6.2.3 Unearned Premium 

Unearned premium is the portion of the gross premium and reinsurance premium written in the current year 

in respect of risks related to subsequent periods. Unearned premium is calculated on the 24th basis in 

accordance with the Rules made by the Insurance Board of Sri Lanka under the Regulation of Insurance 

Industry Act No. 43 of 2000. 

6.2.4 Unexpired Risk 

Provision is made where appropriate for the estimated amount required over and above unearned premiums 

to meet future claims and related expenses on the business in force as at the reporting date. 

6.2.5 Deferred Acquisition Expenses 

Acquisition expenses, represent commissions and other underwriting expenses, which vary with and are 

directly related to the production of business, are deferred and amortised over the period in which the 

related written premium is earned. Reinsurance Commission is also treated in the same manner with 

deferred 

acquisition costs and it is calculated on the 24th basis in accordance with the Rules made by the Insurance 

Board of Sri Lanka under the Regulation of Insurance Industry Act No. 43 of 2000. 

6.2.6 Premiums Receivable 


126

According to the Premium Payment Warranty (PPW) ruling by the Insurance Board of Sri Lanka (IBSL), all 

policies issued and not recovered over 60 days are cancelled. 

6.2.7 Reinsurance Receivable 

Reinsurance assets include the balances due from both insurance and reinsurance companies for paid and 

unpaid losses and loss adjustment expenses. Amounts recoverable from reinsurers are estimated in a 

manner consistent with the claim liability associated with the reinsured policy. Reinsurance is recorded gross 

in the Balance Sheet, unless a right to offset exists. 

If a reinsurance asset is impaired, the Company reduces the carrying amount accordingly and recognises a 

loss in the Statement of Income. A reinsurance asset is impaired if there is objective evidence, as a result of 

an event that occurred after the initial recognition of the reinsurance asset, that the Company may not receive 

amounts due to it under the terms of their contract, and the event has a reliably measurable impact on the 

amount that the Company will receive from the reinsurer. 

6.2.8 Claims 

Claims expense and a liability for outstanding claims are recognised in respect of direct and inwards 

reinsurance business. The liability covers claims Incurred But Not Reported claims (IBNR) and the anticipated 

direct and indirect costs of settling those claims. Claims outstanding are assessed by review of individual 

claim files and estimating changes in the ultimate cost of settling claims, IBNRs and settlement costs using 

statistics, based on past experience and trends. 

Actuarial valuations are performed on an annual basis. While the Directors consider that the provision for 

claims is fairly stated on the basis of information currently available, the ultimate liability will vary as a result 

of subsequent information and events. This may result in adjustments to the amounts provided. Such 

amounts are reflected in the Financial Statements for that period. The methods used and the estimates made 

are reviewed regularly. 

In addition to the normal insurance policies, the Company has issued the advance, bid and performance 

bonds during the financial period and claims expenses on those bonds have been specifically mentioned in 

the bond agreements with the policyholders. 

6.3 LIFE INSURANCE BUSINESS 

6.3.1 Gross Written Premium 

Premium from traditional life insurance contracts, including participating contracts and annuity policies with 

life contingencies, is recognised as revenue when cash is received from the policyholder. Benefits and 

expenses are provided against such revenue to recognised profits over the estimated life of the policies. 

Moreover, for single premium contracts, premium is recorded as income when received with any excess 

profit deferred and recognise in income in a constant relationship to the insurance in-force or, for annuities, 

the amount of expected benefit payments. 

6.3.2 Reinsurance Premium 

Outward reinsurance premium is recognised when payable. Reinsurance recoveries are credited to match the 

relevant gross claims. 

6.3.3 Benefits, Losses and Expenses 

Death claims are recorded on the basis of notifications received. Surrenders, maturities and annuity 

payments are recorded when due. Claims payable include direct costs of settlement. Interim payments and 

surrenders are accounted for only at the time of settlement. 

6.3.4 Actuarial Valuation for Long-Term Insurance Provision 

The Directors agree to the long-term insurance provision for the Company at the year end on the 

recommendations of the Consultant Actuary following his annual investigation of the life insurance business. 

The actuarial valuation takes into account all liabilities and is based on assumptions recommended by the 

Consultant Actuary. 


127

7. ISLAMIC BANKING POLICIES 

Islamic Banking operations in the Bank are conducted in line with Shari’ah principles while complying with 

the Bank of Ceylon Ordinance and the Banking Act No. 30 of 1988 and amendments thereto. A separate 

unit has been formed in line with the Standards set out by the Banking Advisory Committee of All Ceylon 

Jamiyathul Ulama (ACJU) - the apex body of Muslim theologians. Accordingly an independent Shari’ah 

Supervisory Board consisting of renowned Shari’ah Scholars of the country has been formed to advise and 

ensure the compliance of Islamic principles.This expert advice is a part of Governance requirement to ensure 

the harmonised operations under the existing regulatory, audit and accounting environment. 

Profit sharing deposits are mobilised under the principle of Mudaraba, which is in line with the Shari’ah 

Standards of Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Similarly, 

demand deposits are accepted under the concept of ‘Qard’ (loan), which enables the depositor to withdraw 

his funds on demand. 

Asset side of the Islamic Banking Balance Sheet is at present, represented by the following instruments that 

are also modified in line with Standards: 

Murabaha to the purchase order 

(cost plus sale) 

Ijarah (leasing) 

Wakala Isthismar (agency arrangement in fund management) 

8. COMMITMENTS AND CONTINGENCIES 

Contingent liabilities are the possible obligations whose existence will be confirmed only by uncertain future 

events or present obligations where the transfer of economic benefit is not probable or cannot be reliably 

measured. Contingent liabilities are not recognised in the Balance Sheet but are disclosed, unless they are 

remote. 

9. SEGMENTAL REPORTING 

Segmental information is presented in accordance with Sri Lanka Accounting Standard No. 28 (Revised 

2000) on ‘Segment Reporting’, in respect of the Group’s business. 

Business segments provide products and services whose risks and returns are different from those of other 

business segments. These segments comprise banking, leasing, treasury and investment, property and 

insurance. 

Geographical segments provide products or services within a particular economic environment where risks and 

returns are different from those of other economic environments. These segments comprise domestic, off-shore 

banking units (branches) and off-shore banking division and foreign subsidiary. 

Measurement of segment results, assets and liabilities include items which are directly attributable or can be 

reasonably allocated to a segment. Other items are reported as unallocated. 

10. CASH FLOW STATEMENT 

The Cash Flow Statement has been prepared by using the ‘Direct Method’ in accordance with the Sri Lanka 

Accounting Standard No. 09 on ‘Cash Flow Statements’. Cash and cash equivalents comprise cash, amounts 

due from other banks and other short-term highly-liquid investments with less then 90 days, maturity 

from date of acquisition. 

11. COMPARATIVE FIGURES 

Where necessary, amounts shown for the previous year have been reclassified to facilitate comparison. 


128

12. EVENTS AFTER THE BALANCE SHEET DATE 

Where necessary, all the material events after the Balance Sheet date have been considered and appropriate 

adjustments/disclosures have been made in the Financial Statements as per the Sri Lanka Accounting 

Standard No. 12 (Revised 2005) on ‘Events After the Balance Sheet Date’. 

13. NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT THE BALANCE SHEET DATE 

Following the convergence of Sri Lanka Accounting Standards with International Financial Reporting 

Standards, the Council of The Institute of Chartered Accountants of Sri Lanka has adopted a new set of 

Financial Reporting Standards that would apply for financial periods beginning on or after 01 January 2012. 

The application of these Financial Reporting Standards is substantially different to the previous Standards. 

Accordingly, Sri Lanka Accounting Standardsare based on International Financial Reporting Standards 

(IFRs) and International Accounting Standards (IASs) formulated by International Accounting Standards 

Board and they will be prefixed as SLFRS or LKAS, respectively. 

These Standards have not been applied in preparing the Financial Statements as they were not effective for 

the year ended 31 December 2010. However, the Bank is in the process of evaluating the impact of adopting 

to new SLFRSs and LKASs from 01 January 2012 with greater consideration on the following Standards: 

LKAS 32 on ‘Financial Instruments: 

Presentation’. (SLAS 44) 

LKAS 39 on ‘Financial Instruments: 

Recognition and Measurement’. (SLAS 45) 

SLFRS 7 on ‘Financial Instruments: 

Disclosure’. (SLAS 46) 

Due to the complex nature of the effects of these Standards, the impact of adoption cannot be estimated as 

at the date of publication of these Financial Statements 


129

NOTES TO THE FINANCIAL STATEMENTS 

For the year ended 31 December 2010 

Rs. ’000 

1. INCOME 

Interest income (Note 2) 

Dividend income (Note 6) 

Net gains from investment in securities (Note 7) 

Fee and commission income (Note 4) 

Foreign exchange profit 

Other operating income (Note 8) 

Recovery of non-performing advances (Note 13) 

Share of profit of Associate Companies before tax (Note 14) 

2. INTEREST INCOME 

Customer advances 

Bills of exchange 

Loans and advances 

Leasing 

Trade finance 

Pawning 

Treasury bills, bonds and other eligible bills 


Short-term funds 

Government of Sri Lanka Restructuring Bonds 

Government securities 

50,853,347 

468,998 

3,105,791 

6,014,178 

408,686 

1,143,913 

1,367,953 

– 

63,362,866 

1,825,130 

24,029,532 

728,841 

1,510,508 

7,144,581 

13,143,034 

990,515 

282,908 

1,025,640 

172,658 

50,853,347 

Bank 

2009 

Rs. ’000 

53,076,779 

347,878 

1,961,210 

4,255,204 

1,566,916 

753,247 

1,500,132 

– 

63,461,366 

1,763,957 

25,608,860 

936,415 

1,876,456 

6,953,328 

13,566,316 

682,904 

531,376 

1,025,640 

131,527 

53,076,779 

2010 

Rs. ’000 

53,062,286 

257,910 

3,508,297 

6,487,663 

418,461 

1,524,738 

1,394,539 

212,898 

66,866,792 

1,893,923 

24,599,475 

2,086,052 

1,536,935 

7,151,380 

13,288,145 

1,001,487 

306,591 

1,025,640 

172,658 

53,062,286 

Net interest income earned from the secondary market transactions in Treasury bills and Treasury bonds has been grossed up by adding the 

notional tax credit to the interest income. More details are given in Note 15.5. 


Rs. ’000 

3. INTEREST EXPENSE 

Customer deposits 



Refinance borrowings 

Other borrowed funds 

4. FEE AND COMMISSION INCOME 

Trade and other related activities 

Travel and remittances 

Personal banking 

Custodial services 

Brokering services 

Others 

22,073,580 

4,285,640 

2,953,869 

280,914 

1,611,157 

31,205,160 

3,733,185 

412,169 

1,674,153 

16,987 

117,067 

60,617 

6,014,178 

Bank 

2009 

Rs. ’000 

26,406,994 

7,060,149 

3,112,970 

235,300 

1,451,461 

38,266,874 

2,310,069 

313,032 

1,507,838 

17,756 

65,527 

40,982 

4,255,204 

2010 

Rs. ’000 

22,452,332 

4,193,817 

3,071,549 

280,914 

2,020,549 

32,019,161 

3,983,843 

418,291 

1,678,646 

16,987 

118,684 

271,212 

6,487,663 

Group 

2009 

Rs. ’000 

55,279,046 

150,456 

2,012,436 

4,353,702 

1,566,916 

1,128,780 

1,506,205 

130,653 

66,128,194 

1,835,221 

25,983,944 

2,335,035 

1,898,749 

6,954,826 

13,843,703 

691,481 

578,920 

1,025,640 

131,527 

55,279,046 

Group 

2009 

Rs. ’000 

27,061,880 

7,059,146 

3,358,567 

235,300 

1,774,928 

39,489,821 

2,312,962 

313,032 

1,507,838 

17,756 

65,718 

136,396 

4,353,702



Rs. ’000 

5. FEE AND COMMISSION EXPENSES 

Brokering services 

Credit cards 

Fees 


6. DIVIDEND INCOME 

Subsidiaries 

- Quoted 

- Unquoted 

Associates 

- Unquoted 


- Quoted 

- Unquoted 

Dealing securities held for trading - Quoted 

Income from Unit Trust 

Preference shares 

7. NET GAINS FROM INVESTMENT IN SECURITIES 

Gains/(losses) on mark to market valuation on securities held for trading 

- Shares 

- Treasury bills and bonds 

Capital gains/(losses) on sale of securities held for trading 

- Shares 

- Treasury bills and bonds 

8. OTHER OPERATING INCOME 

Profit/(loss) on sale of property, plant & equipment including 

foreclosed properties 

Other income 

9. PERSONNEL COSTS 

Staff emoluments 

Employers’ contribution to defined contribution plans 

- Employees’ Provident Fund 

- Employees’ Trust Fund 

Other personnel cost 

125,697 

238,066 

69,454 

34,081 

467,298 

189,377 

12,666 

20,676 

73,985 

8,652 

64,339 

98,448 

855 

468,998 

79,714 

132,068 

1,856,780 

1,037,229 

3,105,791 

26,775 

1,117,138 

1,143,913 

526,179 

130,486 

525,806 

8,044,072 

Bank 

2009 

Rs. ’000 

153,012 

180,592 

178,039 

32,752 

544,395 

172,657 

22,140 

4,675 

55,252 

24,457 

19,473 

49,224 

– 

347,878 

164,076 

363,630 

651,881 

781,623 

1,961,210 

98,371 

654,876 

753,247 

513,648 

128,002 

473,399 

8,107,775 

The number of persons employed by the Bank as at 31 December 2010 was 8,204 (7,538 as at 31 December 2009). 

2010 

Rs. ’000 

202,042 

238,066 

70,166 

45,734 

556,008 

_ 

_ 

_ 

73,985 

11,048 

73,574 

98,448 

855 

257,910 

216,078 

143,923 

2,088,752 

1,059,544 

3,508,297 

32,494 

1,492,244 

1,524,738 

582,875 

143,469 

663,988 

8,731,783 

Group 

2009 

Rs. ’000 

153,012 

180,592 

182,749 

34,124 

550,477 

_ 

_ 

_ 

55,252 

25,649 

20,333 

49,222 

– 

150,456 

181,019 

397,913 

651,881 

781,623 

2,012,436 

111,975 

1,016,805 

1,128,780 

6,861,601 6,992,726 7,341,451 7,313,945 

547,729 

136,002 

574,654 

8,572,330



Rs. ’000 

10. STAFF RETIREMENT BENEFITS 

Employers’ contribution to defined benefit plans 

Bank of Ceylon Pension Trust Fund 

Bank of Ceylon Widows’/Widowers’ and Orphans’ Pension Fund 

Provision for terminal gratuity 

1,730,096 

456,000 

80,023 

2,266,119 

Bank 

2009 

Rs. ’000 

1,883,403 

456,000 

70,228 

2,409,631 

2010 

Rs. ’000 

1,730,096 

456,000 

112,983 

2,299,079 

The Bank has a Pension Scheme established under an Industrial Award which is solely funded by the Bank. There is also a Widows’/Widowers’ 

and Orphans’ Pension Scheme established by the members. Both these funds have been closed to new entrants as from 01 January 1996. 

The assets of these two plans are held independently of the Bank’s assets and administered by Boards of Trustees/Managers, representing the 

management and the employees, as provided in the Trust Deed/Rules of the respective Funds. 

Both Funds are subject to annual audits independent of the audit of the Bank, by a firm/s of Chartered Accountants appointed by the members 

and actuarial valuations are carried out at least once in three years, as per the rules governing these Funds. 

10.1 BANK OF CEYLON PENSION TRUST FUND 

An actuarial valuation of the Pension Fund as at 31 December 2010 was carried out by Messrs K A Pandit - Consultants & Actuaries of Mumbai, 

India, a firm of professional actuaries. 

The valuation has been done using the ‘Projected Unit Credit Method’, which is recommended in the Sri Lanka Accounting Standard No. 16 

(Revised 2006) on ‘Employee Benefits’. 

(a) The results of the actuarial valuation of the Pension Fund is summarised as follows: 

Present value of funded obligations 

Fair value of plan assets 

Present value of net obligations 

(b) Movement in the present value of defined benefit obligations 

Liability for defined benefit obligation at the beginning of the year 

Interest cost 

Current service cost 

Benefit paid by the plan 

Actuarial (gain)/loss on obligation 

Liability at the end of the year 

(c) Plan assets 

Bonds and securities issued by the Government of Sri Lanka 

Debentures issued by Corporates 

Investment in equity shares 

Fixed deposits 

Other investments 

Other receivable 

31 December 

2010 

Rs. ’000 

41,981,000 

(43,907,940) 

(1,926,940) 

2010 

Rs. ’000 

38,377,130 

3,837,710 

570,330 

(3,439,000) 

2,634,830 

41,981,000 

13,588,916 

14,395,460 

4,708,274 

8,450,000 

478,598 

2,286,692 

43,907,940 

31 December 

2009 

Rs. ’000 

38,377,130 

(39,843,170) 

(1,466,040) 

2009 

Rs. ’000 

33,111,760 

3,973,410 

622,180 

(2,333,330) 

3,003,110 

38,377,130 

13,099,040 

5,500,000 

3,182,390 

14,620,000 

732,585 

2,709,155 

39,843,170 

Group 

2009 

Rs. ’000 

1,883,403 

456,000 

88,064 

2,427,467


(d) Movement in plan assets 

Fair value of plan assets at the beginning of the year 

Expected return on plan assets 

Contribution paid into plan 

Benefits paid by the plan 

Actuarial gain/(loss) on plan assets 

Fair value of plan assets at the end of the year 

(e) Actuarial assumptions 

Future salary increase 

Increase in future Cost of Living Allowance (COLA) 

Increase in pension in payment (Basic) 

Rate of discounting 

Rate of return on plan assets 

Attrition rate 

2010 

Rs. ’000 

10.2 BANK OF CEYLON WIDOWS’/WIDOWERS’ AND ORPHANS’ PENSION FUND 

(a) An actuarial valuation of the Pension Fund as at 31 December 2010 was carried out by Messrs K A Pandit - 

Consultants & Actuaries of Mumbai, India, a firm of professional actuaries. 

The valuation has been done using the ‘Projected Unit Credit Method’, which is recommended in the Sri Lanka 

Accounting Standard No. 16 (Revised 2006) on ‘Employee Benefits’. 

The results of the actuarial valuation of the W/W & O Pension Fund is summarised as follows: 

Present value of funded obligations 

Fair value of plan assets 

Present value of net obligations 

(b) Movement in the present value of defined benefit obligations 

Liability for defined benefit obligation at the beginning of the year 

Interest cost 

Benefit paid by the plan 

Actuarial (gain)/loss on obligation 

Liability at the end of the year 

39,843,170 

3,984,320 

1,729,642 

(3,439,000) 

1,789,808 

43,907,940 

6.5% p.a. 

6.0% p.a. 

Nil 

10.0% p.a. 

10.0% p.a. 

0.4% p.a. 

31 December 

2010 

Rs. ’000 

10,138,000 

(10,346,890) 

(208,890) 

2010 

Rs. ’000 

9,515,950 

951,600 

(363,140) 

33,590 

10,138,000 

2009 

Rs. ’000 

33,111,760 

3,969,257 

1,883,403 

(2,333,330) 

3,212,080 

39,843,170 

6.5% p.a. 

6.0% p.a. 

Nil 

10.0% p.a. 

10.0% p.a. 

0.4% p.a. 

31 December 

2009 

Rs. ’000 

9,515,950 

(9,035,020) 

480,930 

2009 

Rs. ’000 

7,394,320 

887,320 

(313,950) 

1,548,260 

9,515,950


(c) Plan assets 

Bonds and securities issued by the Government of Sri Lanka 



(d) Movement in plan assets 

Fair value of plan assets at the beginning of the year 

Expected return on plan assets 

Contribution paid by members 

Special contribution paid by the Bank 

Benefits paid by the plan 

Actuarial gain/(loss) on plan assets 

Fair value of plan assets at the end of the year 

(e) Actuarial assumptions 



Increase in Widows‘/Widowers‘ and Orphans‘ Pension in payment (Basic) 




2010 

Rs. ’000 

1,739,921 

4,037,160 

4,569,809 

10,346,890 

10.3 GRATUITY FUND 

Provision is made to meet the Bank’s obligation to pay gratuity in terms of the Payment of Gratuity Act No. 12 of 1983, 

to all those employees who have joined after 01 January 1996. Provision also includes those who have joined the Bank 

prior to 01 January 1996 and leave the Bank without being entitled to a pension. The probability of early withdrawal 

has been considered as 1% in the case of those joined after 01 January 1996 and 0.4% in the case of others by the 

actuaries based on the historical data. 

An actuarial valuation of the Gratuity Fund as at 31 December 2010 was carried out by Messrs K A Pandit - Consultants 

& Actuaries of Mumbai, India, a firm of professional actuaries. 

The valuation has been done using the ‘Projected Unit Credit Method’, which is recommended in the Sri Lanka 

Accounting Standard No. 16 (Revised 2006) on ‘Employee Benefits’. 

The results of the actuarial valuation of the Gratuity Fund indicate that the present value of the obligation is 

Rs. 197.93 million as at 31 December 2010 (2009 - Rs. 167.95 million). The provision made by the Bank is adequate to 

meet its gratuity obligations in full. 

The principal actuarial assumptions used in the valuation were as follows: 

Actuarial assumptions 



Increase in gratuity in payment (Basic) 




9,035,020 

903,500 

225,830 

456,000 

(363,140) 

89,680 

10,346,890 

6.5% p.a. 

6.0% p.a. 

Nil 

10.0% p.a. 

10.0% p.a. 

1.0% & 0.4% p.a. 

2010 

Rs. ’000 

6.5% p.a. 

6.0% p.a. 

Nil 

10.0% p.a. 

10.0% p.a. 

1.0% & 0.4% p.a. 

2009 

Rs. ’000 

1,304,550 

2,050,000 

5,680,470 

9,035,020 

7,394,320 

887,320 

244,450 

456,000 

(313,950) 

366,880 

9,035,020 

6.5% p.a. 

6.0% p.a. 

Nil 

10.0% p.a. 

10.0% p.a. 

1.0% & 0.4% p.a. 

2009 

Rs. ’000 

6.5% p.a. 

6.0% p.a. 

Nil 

10.0% p.a. 

10.0% p.a. 

1.0% & 0.4% p.a.



Rs. ’000 

11. PREMISES, EQUIPMENT & ESTABLISHMENT AND 

OTHER OPERATING EXPENSES 

Premises, equipment & establishment and other operating 

expenses include the following: 

Directors’ emoluments 

Auditors’ remuneration 

Depreciation on property, plant & equipment (Note 29) 

Depreciation on investment properties (Note 25) 

Amortisation of leasehold land (Note 30) 

Amortisation of intangible assets (Note 31) 

Professional expenses 

Legal expenses 

Donations 

1,570 

20,467 

784,993 

– 

2,296 

54,873 

78,554 

34,380 

47 

Bank 

2009 

Rs. ’000 

1,707 

21,194 

686,428 

– 

1,095 

185,473 

52,386 

24,636 

21 

2010 

Rs. ’000 

12,604 

35,835 

889,616 

3,074 

3,653 

59,076 

104,439 

49,355 

1,355 

As per the Banking Act Direction No. 5 of 2010, the Bank is required to provide a premium of 0.1% or 0.125% of the eligible deposit liabilities 

depending on the Capital Adequacy Ratio (CAR) of the immediate proceeding audited Financial Statements, payable quarterly on ‘Deposit 

Insurance Scheme’ with effect from 01 October 2010. Accordingly, the Bank has provided a sum of Rs. 95,952,038/- on account of Deposit 

Insurance Scheme during the last quarter of year 2010. 


Rs. ’000 

12. PROVISION FOR LOAN LOSSES 

Specific provision for loans and advances 

Specific provision for pawning advances 

Specific provision for credit card receivable 

Specific provision for bills of exchange 

Specific provision for leasing facilities 

Specific provision for foreclosed properties 

Total specific provision for loans and advances 

General provision made for regular advances 

General provision for bills of exchange 

General provision for leasing facilities 

Total general provision for loans and advances 

Total provision for loan losses 

1,066,497 

18,806 

(38,193) 

1,047,110 

(13,628) 

32,684 

5,712 

1,071,878 

490,924 

(1,470) 

(1,438) 

488,016 

1,559,894 

Bank 

2009 

Rs. ’000 

1,340,832 

47,725 

24,080 

1,412,637 

197,954 

192,126 

– 

1,802,717 

(556) 

(122) 

(334) 

(1,012) 

1,801,705 

2010 

Rs. ’000 

1,082,639 

18,806 

(38,193) 

1,063,252 

(15,538) 

148,712 

5,712 

1,202,138 

497,944 

3,121 

22,794 

523,859 

1,725,997 

Group 

2009 

Rs. ’000 

12,031 

24,023 

790,745 

3,060 

2,452 

189,860 

74,924 

32,528 

370 

Group 

2009 

Rs. ’000 

1,245,527 

47,725 

24,080 

1,317,332 

198,864 

376,613 

– 

1,892,809 

8,878 

1,972 

(8,682) 

2,168 

1,894,977



Rs. ’000 

13. RECOVERY OF NON-PERFORMING ADVANCES 

Recovery of loans written-off in previous years 

Reversal of provisions for non-performing advances 

14. SHARE OF PROFIT OF ASSOCIATE COMPANIES BEFORE TAX 


Southern Development Financial Company Limited 

Lanka Securities (Private) Limited 

Mireka Capital Land (Private) Limited 

Transnational Lanka Records Solutions (Private) Limited 


15. INCOME TAX EXPENSE 

The break-up of income tax expense is as follows: 

15.1 BANK 

Domestic branch operations 

Income tax on profit of domestic operations of the Bank 

Off-shore Banking Division (OBD) 

Income tax on profits of on-shore operations of OBD 

Income tax on profits of off-shore operations of OBD 

Overseas branch operations 

Income tax on profits of the branch in Maldives 

Income tax on profits of the branch in Chennai 

(Over)/Under provision for taxation in respect of prior years 

15.2 SUBSIDIARY COMPANIES 

Income tax on profit of: 



BoC Management & Support Services (Private) Limited 

BoC Property Development & Management (Private) Limited 



Merchant Credit of Sri Lanka Limited 


Ceybank Holiday Homes (Private) Limited 


70,866 

1,297,087 

1,367,953 

– 

– 

– 

– 

– 

– 

– 

946,236 

74,252 

103,373 

86,779 

(37,413) 

3,639,123 

Bank 

2009 

Rs. ’000 

102,013 

1,398,119 

1,500,132 

– 

– 

– 

– 

– 

– 

– 

984,383 

54,719 

97,572 

102,526 

(165,199) 

1,220,719 

2010 

Rs. ’000 

97,452 

1,297,087 

1,394,539 

26,331 

(495) 

116,606 

75,773 

5,123 

(10,440) 

212,898 

946,236 

74,252 

103,373 

86,779 

40,043 

3,716,579 

Group 

2009 

Rs. ’000 

108,086 

1,398,119 

1,506,205 

6,215 

(722) 

41,773 

42,626 

4,885 

35,876 

130,653 

2,465,896 146,718 2,465,896 146,718 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

167,361 

105,640 

64 

13,006 

4,711 

8,382 

27,648 

5,431 

877 

5,516 

338,636 

984,383 

54,719 

97,572 

102,526 

(155,464) 

1,230,454 

178,696 

63,770 

193 

11,870 

4,543 

206 

15,722 

1,152 

837 

– 

276,989



Rs. ’000 

15.3 ASSOCIATE COMPANIES 

Share of income tax on profit of: 


Southern Development Financial Company Limited 



Transnational Lanka Records Solutions (Private) Limited 

Deferred tax (released)/charged (Note 36) 48,134 

3,687,257 

– 

– 

– 

– 

– 

– 

Bank 

2009 

Rs. ’000 

– 

– 

– 

– 

– 

– 

(97,078) 

1,123,641 

2010 

Rs. ’000 

12,297 

– 

42,353 

2,236 

795 

57,681 

49,393 

4,162,289 

Group 

2009 

Rs. ’000 

4,144 

175 

15,914 

11 

865 

21,109 

(125,565) 

1,402,987 

15.4 RECONCILIATION OF ACCOUNTING PROFIT AND INCOME TAX EXPENSE IS AS FOLLOWS: 

Bank Group 

For the year ended 31 December 

2010 

2009 

2010 

2009 

Tax Rate 

Rs. ’000 

Rs. ’000 

Rs. ’000 

Rs. ’000 

Accounting profit before tax 

Tax effect at the statutory income tax rates 

Domestic operations of the Bank 

On-shore banking operations of the off-shore banking 

division of the Bank 

Off-shore banking operations of the off-shore banking 

division of the Bank 

Foreign branch operations 

Male 

Chennai 

Subsidiaries [Note 15.4 (a)] 

Tax effect of deductible expenses 

Tax effect of non-deductible expenses 

Share of income tax expenses of Associates 

Social responsibility levy at 1.5% of income tax 

(Over)/Under provision of taxes in respect of prior years 

Deferred tax (reversal)/charge 

Income tax expense reported in the income statement 

35.0% 

35.0% 

20.0% 

25.0% 

40.0% 

10,052,569 4,207,647 11,075,485 4,719,910 

2,497,910 

946,236 

74,252 

103,373 

86,779 

– 

3,708,550 

(3,544,769) 

3,461,232 

– 

51,523 

(37,413) 

48,134 

3,687,257 

433,574 

984,383 

54,719 

97,572 

102,526 

– 

1,672,774 

(3,166,183) 

2,861,803 

– 

17,524 

(165,199) 

(97,078) 

1,123,641 

2,497,910 

946,236 

74,252 

103,373 

86,779 

300,341 

4,008,891 

(4,398,874) 

4,349,499 

57,681 

55,656 

40,043 

49,393 

4,162,289 

433,574 

984,383 

54,719 

97,572 

102,526 

158,175 

1,830,949 

(3,889,160) 

3,700,175 

21,109 

20,943 

(155,464) 

(125,565) 

1,402,987


15.4 (a) Income tax rates which were applicable for Subsidiaries in 2009 and 2010 are as follows: 

Subsidiaries 2010 2009 

1. Property Development PLC 

2. Merchant Bank of Sri Lanka PLC 

3. BoC Management & Support Services (Private) Limited 

4. BoC Property Development & Management (Private) Limited 

5. BoC Travels (Private) Limited 

6. Hotels Colombo (1963) Limited 

7. Merchant Credit of Sri Lanka Limited 

8. Ceylease Financial Services Limited 

9. Ceybank Holiday Homes (Private) Limited 

- Hotel business 

- Other activities 

10. MBSL Insurance Company Limited 

11. Koladeniya Hydropower (Private) Limited* 

12. Bank of Ceylon (UK) Limited 

*As per the agreement with Board of Investment (BOI), Koladeniya Hydropower (Private) Limited is exempted from taxation for the year 2010. 

15.5 NOTIONAL CREDIT FOR WITHHOLDING TAX ON GOVERNMENT SECURITIES ON SECONDARY MARKET TRANSACTIONS 

In terms of the Section 137 of the Inland Revenue Act No. 10 of 2006 and the amendments thereto, a company which derives interest 

income from the secondary market transactions in Government securities would be entitled to a notional tax credit [being one-ninths (1/9) 

of the net interest income], provided such interest income form a part of statutory income of the Company for that year of assessment. 

Accordingly, the net income earned by the Bank and the Group on the secondary market transactions in Government securities for the 

year has been grossed up in the Financial Statements and the resulting notional tax credit amounted to a sum of Rs. 659,630,077/- 

(2009 - Rs. 351,925,417/-) for the Bank and Rs. 685,026,871/- (2009 - Rs. 380,872,682/-) for the Group. 

16. EARNINGS PER SHARE AND DIVIDENDS PER SHARE 

EARNINGS PER SHARE 

As per the Sri Lanka Accounting Standard No. 34 (Revised 2005) on ‘Earning Per Share’, basic earnings per share is calculated by dividing 

the profit or loss attributable to ordinary shareholders of the parent entity (the numerator) by the weighted average number of ordinary 

shares in issue (the denominator) during the year. 

DIVIDENDS PER SHARE 

Dividends per share is calculated by dividing the total profit distributed to shareholders (the numerator) by the weighted average number 

of ordinary shares in issue (the denominator) during the year. 


Rs. ’000 

Profit/(loss) attributable to ordinary shareholders of the parent 

Total dividends declared to shareholders during the year 

Weighted average number of ordinary shares in issue 

Basic earnings per share (Rs.) 

Dividend per share (Rs.) 

6,365,312 

3,096,410 

5,000,000 

1,273.06 

619.28 

Bank 

2009 

Rs. ’000 

3,084,006 

1,346,410 

5,000,000 

616.80 

269.28 

35% 

35% 

15% 

35% 

15% 

15% 

35% 

35% 

15% 

35% 

35% 

– 

28% 

2010 

Rs. ’000 

6,760,310 

3,096,410 

5,000,000 

1,352.06 

619.28 

35% 

35% 

15% 

35% 

15% 

15% 

35% 

35% 

15% 

35% 

35% 

– 

– 

Group 

2009 

Rs. ’000 

3,299,873 

1,346,410 

5,000,000 

659.97 

269.28


16.1 DIVIDENDS 

Under the agreement between the Bank of Ceylon and the Government of Sri Lanka, on re-capitalising and granting of autonomy to the 

Bank, the Government reserves the option of the level of profit after tax that will be retained by the Bank. 

All profits after deduction of provision for taxation, provision for loan losses and any such portion for reserves, if any, as the Government 

shall determine, will be issued as dividends to the Government at the end of each year. 

Accordingly, a sum of Rs. 3,096 million has been declared by the Bank as dividends for the year 2010 (2009 - Rs. 1,346 million). 

As at 31 December 2010 

Rs. ’000 

17. CASH AND SHORT TERM FUNDS 

Coins, notes held in local currency 

Coins, notes held in foreign currency 

Balances with other banks 

18. BALANCES WITH CENTRAL BANKS 

Central Bank of Sri Lanka (Note 18.1) 

Reserve Bank of India (Note 18.2) 

Maldives Monetary Authority (Note 18.3) 

8,044,372 

715,208 

5,344,223 

14,103,803 

22,933,090 

393,699 

2,567,677 

25,894,466 

Bank 

2009 

Rs. ’000 

7,241,555 

763,214 

5,504,083 

13,508,852 

13,910,808 

615,333 

1,737,327 

16,263,468 

2010 

Rs. ’000 

8,079,260 

715,208 

4,960,389 

13,754,857 

22,933,090 

393,699 

2,567,677 

25,894,466 

18.1 In terms of the provisions of Section 93 of the Monetary Law Act No. 58 of 1949, the Bank is required to maintain a cash reserve 

with the Central Bank of Sri Lanka. The minimum cash reserve required to be maintained at the Central Bank of Sri Lanka as at 

31 December 2010 was 7.0% (2009: 7.0%) of Sri Lanka Rupee deposit liabilities. There is no reserve requirement for foreign currency 

deposit liabilities maintained by domestic branches and the deposit liability of the Off-shore Banking Division in Sri Lanka (2009: Nil). 

Group 

2009 

Rs. ’000 

18.2 Section 42 (1) of the Reserve Bank of India (RBI) Act of 1934, requires that the branch in Chennai maintains a cash reserve of 6.0% 

(31 December 2009: 5.5%) with the Reserve Bank of India, being the minimum cash reserve requirement, as at 31 December 2010 on its 

demand and term deposit liabilities. 

18.3 Regulations issued by Maldives Monetary Authority (MMA), requires that 50% of minimum required capital of the branch in 

Maldives be maintained in a deposit with MMA (2009: 50%). In addition, a reserve of 25% on the deposit liability (2009 - 25%) should 

also be maintained with the MMA. 

19. TREASURY BILLS, BONDS AND OTHER ELIGIBLE BILLS 

Treasury bills, bonds and other eligible bills are debt securities issued by the Government of Sri Lanka and the respective Government 

authorities where the overseas branches are located. 

Treasury bills, bonds and other eligible bills maturing within the period of less than twelve months have been classified as follows: 


Rs. ’000 

Gross Treasury bills & bonds held for trading 

Gain/(loss) on marked to market valuation 

Net Treasury bills & bonds held for trading 

Treasury bills, bonds and other eligible bills held to maturity 

27,685,647 

62,012 

27,747,659 

17,631,354 

45,379,013 

Bank 

2009 

Rs. ’000 

14,576,408 

44,075 

14,620,483 

14,114,913 

28,735,396 

2010 

Rs. ’000 

28,655,330 

62,012 

28,717,342 

17,631,354 

46,348,696 

The details of the Treasury bills & bonds that have been pledged as security for liabilities at the year end are disclosed in Note 44. 

7,261,393 

763,214 

5,492,647 

13,517,254 

13,910,808 

615,333 

1,737,327 

16,263,468 

Group 

2009 

Rs. ’000 

15,529,297 

44,075 

15,573,372 

14,114,913 

29,688,285


As at 31 December 

20. DEALING SECURITIES 

LISTED EQUITY SECURITIES 

Bank, Finance and Insurance 

Central Finance Company PLC 

Ceylon Investment PLC 

Commercial Bank of Ceylon PLC - Voting 

Commercial Bank of Ceylon PLC - Non-Voting 

DFCC Bank 

Hatton National Bank PLC - Voting 

Hatton National Bank PLC - Non-Voting 

HDFC Bank of Sri Lanka 

Lanka ORIX Leasing Company PLC 

LB Finance PLC 

Nations Trust Bank PLC - Voting 

Sampath Bank PLC 

Diversified Holdings 

Aitken Spence PLC 

Carsons Cumberbatch PLC 

C T Holdings PLC 

Hayleys PLC 

Hemas Holdings PLC 

John Keells Holdings PLC 

Richard Pieris & Company PLC 

Manufacturing 

ACL Cables PLC 

Chevron Lubricants Lanka PLC 

Dipped Products PLC 

Kelani Tyres PLC 

Lanka Cement PLC 

Lanka Floortiles PLC 

Lanka Walltiles PLC 

Piramal Glass Ceylon PLC 

Royal Ceramics Lanka PLC 

Sierra Cables PLC 

Tokyo Cement Company (Lanka) PLC - Voting 

No. of 

ordinary 

shares 

– 

– 

16,100 

199,300 

800,000 

1,031,600 

439,900 

– 

346,800 

38,400 

953,500 

629,800 

212,300 

43,200 

310,000 

157,100 

30,000 

1,080,235 

8,734,900 

379,900 

768,200 

882,400 

50,000 

9,583,809 

210,000 

38,900 

1,000,000 

403,000 

436,400 

75 

2010 

Market price 

per share 

Rs. 

– 

– 

259.90 

162.00 

200.20 

399.90 

214.60 

– 

127.80 

261.90 

83.40 

271.90 

169.90 

513.20 

182.70 

345.00 

44.50 

298.40 

10.50 

85.10 

159.50 

119.70 

49.30 

28.00 

134.30 

138.90 

7.80 

304.90 

4.30 

55.00 

Carrying 

value 

Rs. ’000 

– 

– 

4,184 

32,287 

160,160 

412,537 

94,402 

– 

44,321 

10,057 

79,522 

171,243 

1,008,713 

36,070 

22,170 

56,637 

54,199 

1,335 

322,342 

91,716 

584,469 

32,329 

122,528 

105,623 

2,465 

268,347 

28,203 

5,403 

7,800 

122,875 

1,876 

4 

697,453 

Bank 

No. of 

ordinary 

shares 

66,500 

17,600 

2,208,945 

– 

315,900 

2,665,200 

– 

90,900 

76,400 

– 

– 

– 

36,100 

– 

100,000 

63,700 

1,031,000 

90,084 

– 

94,400 

– 

24,900 

– 

9,583,809 

74,800 

273,400 

4,021,200 

348,200 

– 

506,300 

2009 

Market price 

per share 

Rs. 

317.50 

247.50 

189.50 

– 

167.00 

170.25 

– 

147.75 

137.00 

– 

– 

– 

1,325.00 

– 

54.00 

171.75 

122.75 

171.50 

– 

76.25 

– 

86.00 

– 

23.25 

66.50 

57.25 

2.20 

66.50 

– 

322.25 

Carrying 

value 

Rs. ’000 

21,114 

4,356 

418,595 

– 

52,755 

453,750 

– 

13,431 

10,467 

– 

– 

– 

974,468 

47,833 

– 

5,400 

10,941 

126,555 

15,449 

– 

206,178 

7,245 

– 

2,141 

– 

222,824 

4,974 

15,652 

8,847 

23,155 

– 

163,155 

447,993



Hotels & Travels 

Aitken Spence Hotel Holdings PLC 

Asian Hotels & Properties PLC 

Eden Hotel Lanka PLC 

Hotel Services (Ceylon) PLC 

John Keells Hotels PLC 

Kandy Hotels Company (1938) PLC 

Taj Lanka Hotels PLC 

The Lighthouse Hotel PLC 

Trans Asia Hotels PLC 

Power & Energy 

Hemas Power PLC 

Lanka IOC PLC 

Laugfs Gas Limited - Voting 

Laugfs Gas Limited - Non-Voting 

Panasian Power Limited 

Telecommunications 

Dialog Axiata PLC 

Sri Lanka Telecom PLC 

Motors 

Diesel & Motor Engineering PLC 

United Motors Lanka PLC 

Plantations 

Agalawatte Plantations PLC 

Balangoda Plantations PLC 

Horana Plantations PLC 

Kahawatte Plantations PLC 

Kegalle Plantations PLC 

Kotagala Plantations PLC 

Malwatte Plantations PLC 

Namunukula Plantations PLC 

No. of 

ordinary 

shares 

541,000 

502,700 

392,300 

575,800 

800,600 

– 

550,000 

100,000 

– 

1,226,800 

233,300 

1,232,700 

350,400 

79,200 

6,400 

214,000 

10,000 

– 

13,600 

103,100 

390,000 

200,000 

117,300 

9,400 

– 

66,400 

Health Care 

Asiri Hospital Holdings PLC 

100,000 

Asiri Surgical Hospital PLC 

179,200 

Ceylon Hospitals PLC 

6 

Nawaloka Hospitals PLC 

3,119,800 

The Lanka Hospitals Corporation PLC – 

* Represents the allotment price of the shares. 

2010 

Market price 

per share 

Rs. 

105.70 

194.00 

57.60 

26.00 

20.00 

– 

71.70 

63.00 

– 

29.50 

18.90 

25.90 

18.50 

3.00* 

11.90 

49.00 

973.50 

– 

63.00 

57.40 

36.40 

28.00 

161.80 

116.90 

– 

119.10 

Carrying 

value 

Rs. ’000 

57,184 

97,524 

22,596 

14,971 

16,012 

– 

39,435 

6,300 

– 

254,022 

36,191 

4,409 

31,927 

6,482 

238 

79,247 

76 

10,486 

10,562 

9,735 

– 

9,735 

857 

5,918 

14,196 

5,600 

18,979 

1,099 

– 

7,908 

54,557 

8.80 

880 

8.70 1,559 

102.00 

1 

3.70 11,543 

– – 

13,983 

Bank 

No. of 

ordinary 

shares 

– 

363,400 

– 

600,000 

369,200 

10,000 

– 

– 

100,000 

1,285,100 

283,300 

– 

– 

– 

– 

214,000 

– 

18,000 

– 

– 

– 

– 

64,500 

– 

8,000 

– 

100,000 

179,200 

10,472 

– 

67,000 

2009 

Market price 

per share 

Rs. 

– 

94.50 

– 

19.00 

22.50 

113.25 

– 

– 

174.25 

19.50 

17.25 

– 

– 

– 

– 

46.00 

– 

64.25 

– 

– 

– 

– 

33.50 

– 

33.00 

– 

10.25 

11.00 

80.25 

– 

19.00 

Carrying 

value 

Rs. ’000 

– 

34,341 

– 

11,400 

8,307 

1,133 

– 

– 

17,425 

72,606 

25,059 

4,887 

– 

– 

– 

29,946 

– 

9,844 

9,844 

– 

1,157 

1,157 

– 

– 

– 

– 

2,161 

– 

264 

– 

2,425 

1,025 

1,971 

840 

– 

1,273 

5,109



Beverage, Food & Tobacco 

Cargills (Ceylon) PLC 

Coco Lanka PLC 

Distilleries Company of Sri Lanka PLC 

The Lion Brewery Ceylon PLC 

Chemical & Pharmaceuticals 

Chemical Industries (Colombo) PLC - Voting 

Chemical Industries (Colombo) PLC - Non-Voting 

Haycarb PLC 

No. of 

ordinary 

shares 

400,000 

69,900 

405,700 

531,700 

208,100 

30,300 

164,400 

2010 

Market price 

per share 

Rs. 

195.40 

64.40 

177.90 

185.10 

140.70 

99.90 

168.50 

Carrying 

value 

Rs. ’000 

78,160 

4,502 

72,174 

98,418 

253,254 

29,280 

3,027 

27,701 

60,008 

Construction & Engineering 

Colombo Dockyard PLC 100,000 275.00 27,500 

27,500 

Trading 

Brown & Company PLC 716,000 246.90 176,780 

176,780 

Investment Trust 

Renuka Holdings PLC – – – 

– 


PC House PLC 

Total dealing securities 

182,700 11.30 2,065 

2,065 

3,232,348 

Bank 

No. of 

ordinary 

shares 

30,000 

– 

– 

– 

1,185,300 

– 

– 

2009 

Market price 

per share 

Rs. 

65.25 

– 

– 

– 

63.00 

– 

– 

Carrying 

value 

Rs. ’000 

1,958 

– 

– 

– 

1,958 

74,674 

– 

– 

74,674 

75 244.75 18 

18 

– – – 

– 

11,000 135.75 1,493 

1,493 

– – – 

– 

1,827,869



LISTED EQUITY SECURITIES 

Bank, Finance and Insurance 

Amana Takaful PLC 

Asia Capital PLC 

Central Finance Company PLC 

Ceylinco Insurance PLC 

Ceylon Investment PLC 

Commercial Bank of Ceylon PLC - Voting 

Commercial Bank of Ceylon PLC - Non-Voting 

DFCC Bank 

First Capital Holdings PLC 

Hatton National Bank PLC - Voting 

Hatton National Bank PLC - Non-Voting 


Janashakthi Insurance Company PLC 

Lanka ORIX Leasing Company PLC 

Lanka Ventures PLC 

LB Finance PLC 


National Development Bank PLC 

Nations Trust Bank PLC - Voting 

Nations Trust Bank PLC - Non-Voting 

Pan Asia Banking Corporation PLC 

People's Merchant Bank PLC 

Sampath Bank PLC 

Seylan Bank PLC - Voting 

Seylan Bank PLC - Non-Voting 

Singer Finance (Lanka) Limited 

SMB Leasing PLC - Voting 

SMB Leasing PLC - Non-Voting 

SMB Leasing PLC - Share Warrants (015) 

SMB Leasing PLC - Share Warrants (016) 

No. of 

ordinary 

shares 

195,800 

12,200 

– 

14,300 

– 

30,400 

199,300 

861,800 

760,000 

1,037,100 

524,300 

– 

805,100 

356,800 

– 

38,400 

17,000 

14,600 

1,026,000 

20,000 

2,833 

6,200 

629,800 

118,500 

41,700 

2,600 

86,800 

1,600,000 

2,000,000 

1,600,000 

2010 

Market price 

per share 

Rs. 

3.00 

47.00 

– 

381.00 

– 

259.90 

162.00 

200.20 

19.00 

399.90 

214.60 

– 

16.00 

127.80 

– 

261.90 

45.80 

349.50 

83.40 

57.60 

52.00 

29.40 

271.90 

97.80 

49.00 

15.00 

1.90 

1.00 

0.80 

0.60 

Carrying 

value 

Rs. ’000 

Group 

No. of 

ordinary 

shares 

2009 

Market price 

per share 

Rs. 

Carrying 

value 

Rs. ’000 

587 

– 

– 

– 

573 

– 

– 

– 

– 

5,448 

68,500 317.50 21,733 

– 

17,635 247.50 4,362 

7,901 2,219,945 189.50 420,449 

32,287 

– 

– 

– 

172,532 415,900 167.00 68,120 

14,440 

– 

– 

– 

414,736 2,699,100 170.25 458,791 

112,515 

– 

– 

– 

– 

90,900 147.75 13,431 

12,882 205,000 

9.50 2,460 

45,599 101,800 137.00 13,406 

– 

40,000 18.00 

566 

10,057 

– 

– 

– 

779 

– 

– 

– 

5,103 

31,000 206.00 4,811 

85,568 160,000 36.50 4,275 

1,152 

– 

– 

– 

147 68,000 20.00 1,144 

182 

– 

– 

– 

171,243 

10,000 204.00 1,736 

11,589 

– 

– 

– 

2,043 

– 

– 

– 

39 

– 

– 

– 

165 

– 

– 

– 

1,600 

– 

– 

– 

1,600 

960 

– 

– 

– 

1,111,727 1,015,284



Diversified Holdings 

Aitken Spence PLC 

Carsons Cumberbatch PLC 

C T Holdings PLC 

Hayleys PLC 

Hemas Holdings PLC 

John Keells Holdings PLC 

The Colombo Fort Land & Building Company PLC 

Richard Peiris & Company PLC 

Manufacturing 

ACL Cables PLC 

ACL Plastics PLC 

Central Industries PLC 

Ceylon Grain Elevators PLC 

Chevron Lubricants Lanka PLC 

Dipped Products PLC 

Hayleys Exports PLC 

Kelani Tyres PLC 

Lanka Cement PLC 

Lanka Floortiles PLC 

Lanka Walltiles PLC 

Pelwatte Sugar Industries PLC 

Piramal Glass Ceylon PLC 

Richard Pieris Exports PLC 

Royal Ceramics Lanka PLC 

Sierra Cables PLC 

Tokyo Cement Company (Lanka) PLC - Voting 

Tokyo Cement Company (Lanka) PLC - Non-Voting 

No. of 

ordinary 

shares 

212,300 

43,200 

342,200 

157,100 

33,900 

1,308,161 

– 

10,589,100 

384,800 

– 

431,700 

– 

768,200 

882,400 

62,600 

50,000 

9,644,209 

212,400 

40,900 

30,800 

1,200,000 

– 

403,000 

436,400 

6,325 

7,500 

2010 

Market price 

per share 

Rs. 

169.90 

513.20 

182.70 

345.00 

44.50 

298.40 

– 

10.50 

85.10 

– 

90.00 

– 

159.50 

119.70 

41.00 

49.30 

28.00 

134.30 

138.90 

27.40 

7.80 

– 

304.90 

4.30 

55.00 

40.30 

Carrying 

value 

Rs. ’000 

36,070 

22,170 

62,520 

54,199 

1,509 

390,355 

– 

111,185 

678,008 

32,746 

– 

38,853 

– 

122,528 

105,623 

2,567 

2,465 

270,038 

28,525 

5,681 

844 

9,360 

– 

122,875 

1,876 

348 

302 

744,631 

Group 

No. of 

ordinary 

shares 

36,100 

– 

100,000 

78,700 

1,031,000 

165,110 

15,000 

150,000 

120,900 

5,000 

– 

40,000 

12,200 

38,400 

– 

– 

9,638,809 

89,800 

294,600 

– 

4,021,200 

5,000 

388,200 

– 

556,300 

– 

2009 

Market price 

per share 

Rs. 

1,325.00 

– 

54.00 

171.75 

122.75 

171.50 

31.50 

39.00 

76.25 

74.00 

– 

14.25 

142.00 

86.00 

– 

– 

23.25 

66.50 

57.25 

– 

2.20 

28.00 

66.50 

– 

322.25 

– 

Carrying 

value 

Rs. ’000 

47,833 

– 

5,400 

13,435 

126,555 

26,121 

441 

5,655 

225,440 

9,116 

329 

– 

563 

1,443 

3,413 

– 

– 

224,802 

5,708 

16,625 

– 

8,847 

129 

25,006 

– 

164,024 

– 

460,005



Hotels & Travels 

Aitken Spence Hotel Holdings PLC 

Amaya Leisure PLC 

Asian Hotels & Properties PLC 

Ceylon Hotels Corporation PLC 

Citrus Leisure PLC 

Dolphin Hotels PLC 

Eden Hotel Lanka PLC 

Galadari Hotels (Lanka) PLC 

Hotel Developers (Lanka) PLC 

Hotel Services (Ceylon) PLC 

John Keells Hotels PLC 

Kandy Hotels Company (1938) PLC 

Marawila Resorts PLC 

Mahaweli Reach Hotels PLC 

Riverina Hotels PLC 

Serendib Hotels PLC 

Stafford Hotels PLC 

Taj Lanka Hotels PLC 

Tangerine Beach Hotels PLC 

The Fortress Resorts PLC 

The Lighthouse Hotel PLC 

Trans Asia Hotels PLC 

Power & Energy 

Hemas Power PLC 

Lanka IOC PLC 

Laugfs Gas Limited - Voting 

Laugfs Gas Limited - Non-Voting 

Panasian Power Limited 

Telecommunications 

Dialog Axiata PLC 

Sri Lanka Telecom PLC 

Motors 

Diesel & Motor Engineering PLC 

United Motors Lanka PLC 

* Represents the allotment price of the shares. 

No. of 

ordinary 

shares 

541,000 

4,214 

571,600 

55,100 

– 

22,800 

688,100 

209,100 

– 

3,602,950 

2,087,233 

– 

11,300 

8,100 

– 

– 

– 

550,000 

– 

123,700 

104,600 

– 

1,241,800 

341,600 

1,405,700 

587,300 

1,985,000 

110,000 

238,900 

10,000 

– 

2010 

Market price 

per share 

Rs. 

105.70 

91.00 

194.00 

36.50 

– 

61.20 

57.60 

35.80 

– 

26.00 

20.00 

– 

14.80 

35.00 

– 

– 

– 

71.70 

– 

20.60 

63.00 

– 

29.50 

18.90 

25.90 

18.50 

3.00* 

11.90 

49.00 

973.50 

– 

Carrying 

value 

Rs. ’000 

57,184 

383 

110,890 

2,011 

– 

1,395 

39,634 

7,486 

– 

93,677 

41,745 

– 

167 

284 

– 

– 

– 

39,435 

– 

2,548 

6,590 

– 

403,429 

36,633 

6,456 

36,408 

10,865 

5,955 

96,317 

1,309 

11,706 

13,015 

9,735 

– 

9,735 

Group 

No. of 

ordinary 

shares 

– 

– 

393,400 

25,100 

23,100 

– 

665,100 

31,600 

3,000 

7,080,750 

429,000 

10,000 

915,900 

– 

42,200 

94,700 

41,600 

4,600 

10,000 

70,000 

– 

100,000 

1,344,700 

295,800 

– 

– 

– 

310,000 

238,900 

– 

18,000 

2009 

Market price 

per share 

Rs. 

– 

– 

94.50 

23.75 

2.10 

– 

26.00 

15.00 

118.00 

19.00 

22.50 

113.25 

5.75 

– 

68.00 

39.25 

28.00 

23.50 

66.00 

12.25 

– 

174.25 

19.50 

17.25 

– 

– 

– 

7.25 

46.00 

– 

64.25 

Carrying 

value 

Rs. ’000 

– 

– 

36,422 

665 

52 

– 

17,377 

499 

411 

118,504 

9,101 

1,133 

6,012 

– 

2,865 

4,015 

1,120 

107 

707 

891 

– 

17,425 

217,306 

26,375 

5,115 

– 

– 

– 

31,490 

4,643 

10,980 

15,623 

– 

1,157 

1,157



Plantations 

Agalawatte Plantations PLC 

Balangoda Plantations PLC 

Horana Plantations PLC 

Kahawatte Plantations PLC 

Kegalle Plantations PLC 

Kotagala Plantations PLC 

Malwatte Plantations PLC 

Maskeliya Plantations PLC 

Namunukula Plantations PLC 

No. of 

ordinary 

shares 

13,600 

124,600 

390,000 

200,002 

117,900 

21,700 

– 

4,000 

66,400 

Health Care 

Asiri Hospital Holdings PLC 

395,200 

Asiri Surgical Hospital PLC 

219,100 

Ceylon Hospitals PLC 

6 

Nawaloka Hospitals PLC 

5,589,800 

The Lanka Hospitals Corporation PLC – 

Beverage, Food & Tobacco 

Cargills (Ceylon) PLC 

Ceylon Tobacco Company PLC 

Coco Lanka PLC 

Distilleries Company of Sri Lanka PLC 

Kotmale Holdings PLC 

Lanka Milk Foods (CWE) PLC 

Nestle Lanka PLC 

Raigam Wayamba Salterns PLC 

Renuka Agri Foods PLC 

The Lion Brewery Ceylon PLC 

Chemical & Pharmaceuticals 

Chemical Industries (Colombo) PLC - Voting 

Chemical Industries (Colombo) PLC - Non-Voting 

Chemanex PLC 

Haycarb PLC 

Lankem Ceylon PLC 

400,000 

– 

75,005 

535,500 

228,200 

81,903 

– 

47,500 

– 

674,700 

253,100 

39,900 

1,000 

194,600 

– 

2010 

Market price 

per share 

Rs. 

63.00 

57.40 

36.40 

28.00 

161.80 

116.90 

– 

27.80 

119.10 

Carrying 

value 

Rs. ’000 

857 

7,152 

14,196 

5,600 

19,076 

2,537 

– 

111 

7,908 

57,437 

8.80 3,478 

8.70 1,906 

102.00 

1 

3.70 20,682 

– – 

26,067 

195.40 

– 

64.40 

177.90 

43.20 

113.00 

– 

4.00 

– 

185.10 

140.70 

99.90 

122.30 

168.50 

– 

78,160 

– 

4,830 

95,265 

9,858 

9,255 

– 

190 

– 

124,887 

322,445 

35,611 

3,986 

122 

32,790 

– 

72,509 

Group 

No. of 

ordinary 

shares 

10,000 

– 

– 

198,100 

69,500 

– 

8,000 

10,200 

– 

120,000 

179,200 

10,472 

200,000 

67,000 

35,000 

10,000 

10,000 

129,800 

50,000 

22,000 

1,000 

– 

1,350,200 

5,000 

1,395,600 

– 

– 

– 

96,400 

2009 

Market price 

per share 

Rs. 

21.75 

– 

– 

31.00 

33.50 

– 

33.00 

18.50 

– 

10.25 

11.00 

80.25 

3.10 

19.00 

65.25 

185.00 

48.50 

105.25 

16.00 

64.00 

415.00 

– 

3.30 

81.00 

63.00 

– 

– 

– 

44.75 

Carrying 

value 

Rs. ’000 

238 

– 

– 

6,218 

2,332 

– 

264 

211 

– 

9,263 

1,197 

1,971 

840 

623 

1,273 

5,904 

2,269 

1,784 

397 

13,437 

837 

1,428 

329 

– 

3,038 

422 

23,941 

85,734 

– 

– 

– 

3,912 

89,646



No. of 

ordinary 

shares 

2010 

Market price 

per share 

Rs. 

Carrying 

value 

Rs. ’000 

Construction & Engineering 

Colombo Dockyard PLC 113,400 275.00 31,185 

31,185 

Trading 

Brown & Company PLC 

Ceylon Foreign Trades PLC 

C W Mackie & Company PLC 

Tess Agro PLC 

Investment Trust 

Environmental Resources Investment PLC 

Renuka Holdings PLC 


PC House PLC 

E-Channelling PLC 

Land & Property 

City Housing & Real Estate Company PLC 

Colombo Land & Development Company PLC 

C T Land Development PLC 

Equity One PLC 

Equity Two PLC 

East West Properties PLC 

Overseas Realty (Ceylon) PLC 

Seylan Developments PLC 

Touchwood Investment PLC 

York Arcade Holdings PLC 

Footwear & Textile 

Hayleys MGT Knitting Mills PLC 

Ceylon Leather Products PLC 

815,300 

100,000 

300 

139,900 

35,000 

– 

665,800 

13,300 

– 

53,500 

– 

40,600 

18,200 

1,200 

403,500 

100,000 

25,000 

45,800 

65,600 

184,300 

246.90 

7.70 

85.10 

2.70 

85.90 

– 

11.30 

22.00 

– 

19.40 

– 

56.00 

24.30 

12.90 

15.30 

16.80 

28.30 

24.10 

32.00 

92.60 

201,297 

770 

26 

378 

202,471 

3,007 

– 

3,007 

7,524 

293 

7,817 

– 

1,038 

– 

2,274 

442 

15 

6,174 

1,680 

708 

1,104 

13,435 

2,099 

17,066 

19,165 

Group 

No. of 

ordinary 

shares 

2009 

Market price 

per share 

Rs. 

Carrying 

value 

Rs. ’000 

11,475 244.75 2,061 

2,061 

22,900 

– 

25,000 

175,000 

– 

11,000 

– 

20,000 

10,000 

65,000 

51,100 

– 

– 

– 

40,000 

– 

– 

– 

834,100 

– 

74.50 

– 

36.00 

1.60 

– 

135.75 

– 

9.75 

21.25 

6.50 

21.50 

– 

– 

– 

15.50 

– 

– 

– 

35.00 

– 

1,347 

– 

834 

327 

2,508 

– 

1,493 

1,493 

– 

237 

237 

346 

390 

1,174 

– 

– 

– 

543 

– 

– 

– 

2,453 

29,994 

– 

29,994 

Services 

John Keells PLC – – – 23,700 153.00 3,578 

3,578 

3,812,400 2,137,383 

Provision for fall in value 

(6,957) 

– 

Total dealing securities 

3,805,443 

2,137,383



Rs. ’000 

21. PLACEMENTS WITH AND LOANS TO OTHER BANKS 

Placements with banks in Sri Lanka 

- Sri Lanka rupee placements 

– 

- Foreign currency placements 

8,502,256 

Placements with banks abroad 

- Foreign currency placements 34,177,542 

22. LOANS AND ADVANCES TO CUSTOMERS 

22.1 BILLS OF EXCHANGE 

Export bills 

Import bills 

Local bills 

Specific provision for bills of exchange [Note 22.1 (b)] 

General provision for bills of exchange [Note 22.1 (c)] 

Interest in suspense [Note 22.1 (d)] 

Net bills of exchange 

22.1 (a) Analysis of net bills of exchange 

Not later than 3 months 

Later than 3 months and not later than 12 months 

22.1 (b) Movement in specific provision for bills of exchange 

Balance as at 01 January 

Amount provided during the year 

Amount reversed during the year 

Adjustments/transfers 

Balance as at 31 December 

22.1 (c) Movement in general provision for bills of exchange 


Amount provided/(reversed) during the year 


22.1 (d) Movement in interest in suspense of bills of exchange 


Interest suspended during the year 



42,679,798 

5,923,519 

9,852,601 

– 

15,776,120 

(156,452) 

(144,248) 

(79,517) 

15,395,903 

15,307,197 

88,706 

15,395,903 

150,371 

(13,628) 

– 

19,709 

156,452 

145,718 

(1,470) 

144,248 

548,125 

12,448 

(481,056) 

79,517 

Bank 

2009 

Rs. ’000 

770,000 

762,152 

44,334,915 

45,867,067 

4,269,855 

11,828,675 

– 

16,098,530 

(150,371) 

(145,718) 

(548,125) 

15,254,316 

14,567,001 

687,315 

15,254,316 

281,682 

197,954 

(301,124) 

(28,141) 

150,371 

145,840 

(122) 

145,718 

553,961 

101,627 

(107,463) 

548,125 

2010 

Rs. ’000 

– 

8,502,256 

39,271,130 

47,773,386 

5,923,519 

9,852,601 

645,682 

16,421,802 

(168,534) 

(158,223) 

(79,517) 

16,015,528 

15,920,399 

95,129 

16,015,528 

164,363 

(15,538) 

– 

19,709 

168,534 

155,102 

3,121 

158,223 

548,125 

12,448 

(481,056) 

79,517 

Group 

2009 

Rs. ’000 

790,000 

762,152 

44,334,915 

45,887,067 

4,269,855 

11,828,675 

469,951 

16,568,481 

(164,363) 

(155,102) 

(548,125) 

15,700,891 

15,013,347 

687,544 

15,700,891 

294,764 

198,864 

(301,124) 

(28,141) 

164,363 

153,130 

1,972 

155,102 

553,961 

101,627 

(107,463) 

548,125



Rs. ’000 

22.2 LOANS AND ADVANCES 

Sri Lanka rupee loans and advances 

Overdrafts 

Term loans 

Trust receipts 

Staff loans 

Loans under schemes 

Foreclosed properties [Note 22.2 (e)] 

Foreign currency loans and advances 

Overdrafts 

Term loans 

Trust receipts 

Staff loans 

Total Sri Lanka rupee and foreign currency loans & advances 

Specific provision for loans & advances [Note 22.2 (b)] 

General provision for loans & advances [Note 22.2 (c)] 

Interest in suspense [Note 22.2 (d)] 

Provision for foreclosed properties [Note 22.2 (f)] 

Net loans and advances 

22.2 (a) Analysis of net loans and advances 

Not later than 1 year 

Later than 1 year and not later than 5 years 

Later than 5 years 

22.2 (b) Movement in specific provision for loans & advances 


Adjustments for difference of currency conversion 

Amounts provided during the year (Note 12) 

Amounts recovered/written back on account of provisions 

previously made 

Amount reversed due to loans written off 



22.2 (c) Movement in general provision for loans & advances 


Adjustments for difference of currency conversion 

Amounts provided/(reversed) during the year 



65,418,200 

164,341,648 

8,785,954 

16,465,422 

11,917,213 

814,154 

267,742,591 

5,899,030 

87,250,968 

9,369,752 

4,334 

102,524,084 

370,266,675 

(6,539,181) 

(2,204,669) 

(8,156,736) 

(268,173) 

353,097,916 

219,528,496 

77,046,369 

56,523,051 

353,097,916 

7,595,463 

(64,329) 

7,531,134 

1,047,110 

(1,279,222) 

(502,599) 

(257,242) 

6,539,181 

1,719,846 

(6,131) 

1,713,715 

490,924 

30 

2,204,669 

Bank 

2009 

Rs. ’000 

56,946,022 

96,685,864 

6,797,199 

14,001,771 

10,200,400 

445,876 

185,077,132 

2,666,731 

66,576,024 

8,381,259 

15,381 

77,639,395 

262,716,527 

(7,595,463) 

(1,719,846) 

(7,766,138) 

(32,796) 

245,602,284 

157,606,283 

44,705,518 

43,290,483 

245,602,284 

7,410,629 

12,333 

7,422,962 

1,412,637 

(1,059,849) 

(291,240) 

110,953 

7,595,463 

1,741,888 

1,164 

1,743,052 

(556) 

(22,650) 

1,719,846 

2010 

Rs. ’000 

65,418,200 

166,113,749 

8,785,954 

16,544,211 

12,204,217 

814,154 

269,880,485 

5,976,977 

87,283,723 

9,369,752 

9,549 

102,640,001 

372,520,486 

(6,589,140) 

(2,232,972) 

(8,164,806) 

(268,173) 

355,265,395 

220,391,054 

78,339,431 

56,534,910 

355,265,395 

7,629,954 

(64,329) 

7,565,625 

1,063,252 

(1,279,896) 

(502,599) 

(257,242) 

6,589,140 

1,741,129 

(6,131) 

1,734,998 

497,944 

30 

2,232,972 

Group 

2009 

Rs. ’000 

56,946,022 

98,281,626 

6,797,199 

14,058,401 

10,213,880 

445,876 

186,743,004 

2,666,731 

66,576,024 

8,381,259 

15,381 

77,639,395 

264,382,399 

(7,629,954) 

(1,741,129) 

(7,776,751) 

(32,796) 

247,201,769 

158,507,011 

45,385,032 

43,309,726 

247,201,769 

7,437,841 

12,333 

7,450,174 

1,317,332 

(1,064,883) 

(291,781) 

219,112 

7,629,954 

1,753,737 

1,164 

1,754,901 

8,878 

(22,650) 

1,741,129



Rs. ’000 

22.2 (d) Movement in interest in suspense of loans & advances 







22.2 (e) Movement in foreclosed properties 


Additions during the year 

Disposals during the year 



22.2 (f) Movement in provision for foreclosed properties 






22.3 LEASE RENTALS RECEIVABLE - NOT LATER THAN ONE YEAR 

Gross lease rentals receivable 

Prepaid rentals 

Unearned income 

Specific provision for lease rentals receivable (Note 22.6) 

General provision for lease rentals receivable (Note 22.7) 

Interest in suspense (Note 22.8) 

Net lease rentals receivable 

7,766,138 

1,172,174 

(82,972) 

(809,899) 

111,295 

8,156,736 

445,876 

431,204 

(61,109) 

(1,817) 

814,154 

32,796 

5,712 

(2,345) 

232,010 

268,173 

2,414,982 

(16,480) 

2,398,502 

(366,977) 

(143,562) 

(21,019) 

(29,009) 

1,837,935 

Bank 

2009 

Rs. ’000 

7,912,498 

687,475 

(487,237) 

(322,439) 

(24,159) 

7,766,138 

340,832 

111,472 

(6,428) 

– 

445,876 

28,501 

– 

(988) 

5,283 

32,796 

2,788,342 

(17,462) 

2,770,880 

(580,685) 

(159,165) 

(22,105) 

(88,212) 

1,920,713 

22.4 LEASE RENTALS RECEIVABLE - LATER THAN ONE YEAR AND NOT LATER THAN FIVE YEARS 


3,152,224 3,101,035 


(26,229) (29,239) 

3,125,995 3,071,796 


(566,315) (546,058) 


(84,589) (104,806) 


(25,826) (26,639) 


(61,430) (106,422) 


2,387,835 2,287,871 

2010 

Rs. ’000 

7,776,751 

1,175,216 

(86,729) 

(811,727) 

111,295 

8,164,806 

445,876 

431,204 

(61,109) 

(1,817) 

814,154 

32,796 

5,712 

(2,345) 

232,010 

268,173 

6,676,887 

(68,454) 

6,608,433 

(1,463,102) 

(362,524) 

(63,320) 

(158,581) 

4,560,906 

8,849,640 

(44,007) 

8,805,633 

(1,689,220) 

(203,729) 

(72,836) 

(96,104) 

6,743,744 

Group 

2009 

Rs. ’000 

7,915,247 

687,475 

(489,629) 

(322,439) 

(13,903) 

7,776,751 

340,832 

111,472 

(6,428) 

– 

445,876 

28,501 

– 

(988) 

5,283 

32,796 

6,961,590 

(83,493) 

6,878,097 

(1,399,152) 

(449,992) 

(60,690) 

(177,955) 

4,790,308 

7,077,698 

(35,659) 

7,042,039 

(1,510,798) 

(211,499) 

(53,133) 

(160,251) 

5,106,358



Rs. ’000 

22.5 LEASE RENTALS RECEIVABLE - LATER THAN FIVE YEARS 








22.6 MOVEMENT IN SPECIFIC PROVISION FOR LEASE RENTALS RECEIVABLE 


Amount recovered/written back on account provisions previously made 


Amount reversed due to facility written off 

Amount provided during the year (Note 12) 


22.7 MOVEMENT IN GENERAL PROVISION FOR LEASE RENTALS RECEIVABLE 


Amount provided/(reversed) during the year 



170,395 

(63) 

170,332 

(167,868) 

– 

(469) 

– 

1,995 

263,971 

(15,520) 

(52,985) 

– 

32,684 

228,150 

48,752 

(1,438) 

– 

47,314 

22.8 MOVEMENT IN INTEREST IN SUSPENSE FOR LEASE RENTALS RECEIVABLE 


194,640 


– 


– 


(104,201) 


90,439 

Bank 

2009 

Rs. ’000 

240 

– 

240 

(19) 

– 

(8) 

(6) 

207 

116,406 

(36,039) 

(8,522) 

– 

192,126 

263,971 

49,086 

(334) 

– 

48,752 

140,158 

– 

347,647 

(293,165) 

194,640 

2010 

Rs. ’000 

170,628 

(63) 

170,565 

(167,872) 

– 

(469) 

– 

2,224 

661,491 

(41,432) 

(62,481) 

(140,037) 

148,712 

566,253 

113,831 

22,794 

– 

136,625 

338,212 

(126,422) 

170,753 

(127,858) 

254,685 

22.9 MOVEMENT IN SPECIFIC PROVISION FOR BILLS OF EXCHANGE, LOANS & ADVANCES, FORECLOSED PROPERTIES 

AND LEASE RENTALS RECEIVABLE - SUMMARY 


8,042,601 7,837,218 

8,488,604 

Adjustments for difference due to currency conversion 

(64,329) 

12,333 

(64,329) 

Amount recovered/written back on account of provisions 

7,978,272 7,849,551 

8,424,275 

previously made 

(1,297,087) (1,398,000) (1,323,673) 


(502,599) (291,240) 

(642,636) 


(58,508) 

79,573 

(68,004) 

Amount provided during the year (Note 12) 

1,071,878 1,802,717 

1,202,138 


7,191,956 8,042,601 

7,592,100 

Group 

2009 

Rs. ’000 

334 

– 

334 

(20) 

– 

(8) 

(6) 

300 

476,285 

(36,239) 

6,938 

(162,106) 

376,613 

661,491 

140,324 

(8,682) 

(17,811) 

113,831 

168,967 

94,339 

368,071 

(293,165) 

338,212 

8,237,390 

12,333 

8,249,723 

(1,403,234) 

(453,887) 

203,193 

1,892,809 

8,488,604



Rs. ’000 

22.10 MOVEMENT IN GENERAL PROVISION FOR BILLS OF EXCHANGE, 

LOANS & ADVANCES AND LEASE RENTALS RECEIVABLE - SUMMARY 


Adjustments for difference due to currency conversion 

Amounts provided during the year (Note 12) 



22.11 MOVEMENT IN INTEREST IN SUSPENSE FOR BILLS OF EXCHANGE, 

LOANS & ADVANCES AND LEASE RENTALS RECEIVABLE - SUMMARY 




Amount written off 



1,914,316 

(6,131) 

1,908,185 

488,016 

30 

2,396,231 

8,508,903 

1,184,622 

(668,229) 

(809,899) 

111,295 

8,326,692 

Bank 

2009 

Rs. ’000 

2010 

Rs. ’000 

22.12 NON-PERFORMING LOANS & ADVANCES 

The Bank’s net exposure on non-performing loans & advances as at Balance Sheet date, before adjusting for the value of securities are 

as follows: 


Rs. ’000 

Non-performing loans and advances 


Loans & advances 

Foreclosed properties 

Lease rentals receivable 

Non-performing advances 

Add: Interest receivable on non-performing 

advances 

Gross non-performing advances 

Less: Interest in suspense for 




Total interest in suspense 

Net non-performing advances 

Less: Specific provision for loan losses for 





Total specific provision for loans & advances 

Net exposure 

284,071 

10,969,634 

814,155 

570,673 

12,638,533 

8,127,464 

20,765,997 

79,517 

8,156,736 

90,439 

8,326,692 

12,439,305 

156,452 

6,539,181 

268,173 

228,150 

7,191,956 

5,247,349 

* As a percentage of total gross loans & advances (Net of interest in suspense). 

% 

3.31 * 

1.88* 

1.37* 

Bank Group 

2009 

Rs. ’000 

548,125 

7,766,138 

194,640 

8,508,903 

15,359,332 

150,371 

7,595,463 

32,796 

263,971 

8,042,601 

7,316,731 

% 

792,563 

13,548,459 

445,877 

755,421 

* 

15,542,320 5.65 

8,325,915 

23,868,235 

2.92* 

2.66* 

1,936,814 

1,164 

1,937,978 

(1,012) 

(22,650) 

1,914,316 

8,606,617 

1,136,749 

(887,865) 

(322,439) 

(24,159) 

8,508,903 

2010 

Rs. ’000 

423,826 

11,473,931 

814,155 

989,169 

13,701,081 

8,141,233 

21,842,314 

79,517 

8,164,806 

254,685 

8,499,008 

13,343,306 

168,534 

6,589,140 

268,173 

566,253 

7,592,100 

5,751,206 

2,010,062 

(6,131) 

2,003,931 

523,859 

30 

2,527,820 

8,663,088 

1,358,417 

(695,643) 

(811,727) 

(15,127) 

8,499,008 

% 

3.49 * 

1.93* 

1.46* 

Group 

2009 

Rs. ’000 

2009 

Rs. ’000 

910,110 

13,605,840 

445,877 

1,319,123 

16,280,950 

8,336,890 

24,617,840 

548,125 

7,776,751 

338,212 

8,663,088 

15,954,752 

164,363 

7,629,954 

32,796 

661,491 

8,488,604 

7,466,148 

2,047,191 

1,164 

2,048,355 

2,168 

(40,461) 

2,010,062 

8,638,175 

1,157,173 

(890,257) 

(322,439) 

80,436 

8,663,088 

% 

5.75* 

3.00* 

2.64*


The Bank’s net exposure on non-performing advances of Rs. 5,247 million as at 31 December 2010 (2009: Rs. 7,317 million) is covered by 

securities valued at Rs. 6,860 million (2009: Rs. 8,459 million). 

The reduction in the value of security corresponds with the reduction in the non-performing category. 

22.12 (a) 


Rs. ’000 

Provision cover - Gross 

Specific provision 

Non-performing loans & advances 

Specific provision to non-performing loans & advances 

Provision cover - Net 

Specific provision 

Net non-performing loans & advances 

Specific provision to non-performing loans & advances 

22.12 (b) Analysis of geographic sector non-performing advances 

7,191,956 

12,638,533 

56.90% 

7,191,956 

12,439,305 

57.82% 


Rs. ’000 


Off-shore banking division 

Overseas branches 

*NPA % of the particular geographic sector. 

22.13 CREDIT CONCENTRATION - GEOGRAPHIC SECTOR RISK CONCENTRATION 

Geographic sector risk concentration within the customer loan portfolio were as follows: 


Rs. ’000 



United Kingdom 

Republic of Maldives 

India 

280,739,408 

93,744,288 

– 

5,979,414 

1,846,662 

382,309,772 

% 

73.4 

24.5 

0.0 

1.6 

0.5 

100.0 

10,154,252 

2,244,907 

239,374 

12,638,533 

Bank 

Bank 

NPA 

% 

2009 

Rs. ’000 

8,042,601 

15,542,320 

51.75% 

8,042,601 

15,359,332 

52.36% 

3.6 

2.4 

3.1 

2010 

Rs. ’000 

7,592,100 

13,701,081 

55.41% 

7,592,100 

13,343,306 

56.90% 

2009 

Rs. ’000 

12,683,363 

1,929,640 

929,317 

15,542,320 

Bank Group 

2009 

Rs. ’000 

218,413,729 

51,323,395 

215,755 

3,842,615 

1,226,814 

275,022,308 

% 

79.4 

18.7 

0.1 

1.4 

0.4 

100 

2010 

Rs. ’000 

291,021,434 

93,744,290 

115,917 

5,979,414 

1,846,662 

392,707,717 

% 

74.1 

23.87 

0.03 

1.5 

0.5 

100 

NPA 

% 

5.8 

3.8 

17.6 

Group 

2009 

Rs. ’000 

2009 

Rs. ’000 

226,689,714 

51,323,394 

215,755 

3,842,615 

1,226,814 

283,298,292 

8,488,604 

16,280,950 

52.14% 

8,488,604 

15,954,752 

53.20% 

% 

80.0 

18.1 

0.1 

1.4 

0.4 

100


22.14 CREDIT CONCENTRATION - ECONOMIC SECTOR RISK CONCENTRATION 

Economic sector risk concentration within the customer loan portfolio were as follows: 


Rs. ’000 

Exports and imports 

Wholesale and retail trade 

Banking, finance and insurance 

Agriculture and fisheries 

Manufacturing 

Hotels, travels and services 

Housing, construction & property 

development 

Consumption and others 

Government & SOEs 


Gross loans & advances 

34,944,448 

23,367,576 

4,657,807 

11,305,962 

11,532,404 

19,088,626 

43,345,196 

95,420,599 

137,833,000 

814,154 

382,309,772 

Bank Group 

2009 

2010 

% Rs. ’000 % 

Rs. ’000 % 

9.1 

6.1 

1.2 

3.0 

3.0 

5.0 

11.3 

25.0 

36.1 

0.2 

100 

32,186,130 

21,058,927 

3,094,565 

7,751,422 

8,324,054 

16,814,594 

35,791,167 

56,647,624 

92,907,949 

445,876 

275,022,308 


Rs. ’000 

22.15 GROSS BILLS OF EXCHANGE, LOANS AND ADVANCES AND 

LEASE RENTALS RECEIVABLE - SUMMARY 

Bills of exchange [Note 22.1] 

Loans and advances [Note 22.2] 

Lease rentals receivable [Note 22.3, 22.4, 22.5] 

Total provision for interest in suspense [Note 22.16] 

Total gross bills of exchange, loans and advances and 

lease rentals receivable 

Total provision for loan losses [Note 22.17] 

Total net bills of exchange, loans and advances and 

lease rentals receivable 

22.16 TOTAL PROVISION FOR INTEREST IN SUSPENSE - SUMMARY 

Bills of exchange [Note 22.1 (d)] 

Loans and advances [Note 22.2 (d)] 

Lease rentals receivable [Note 22.8] 

22.17 TOTAL PROVISION FOR LOAN LOSSES - SUMMARY 

Bills of exchange [Note 22.1 (b), 22.1 (c)] 

Loans and advances [Note 22.2 (b), 22.2 (c) and 22.2 (f)] 

Lease rentals receivable [Note 22.6, 22.7] 

15,776,120 

370,266,675 

4,593,669 

390,636,464 

(8,326,692) 

382,309,772 

(9,588,187) 

372,721,585 

79,517 

8,156,736 

90,439 

8,326,692 

300,700 

9,012,023 

275,464 

9,588,187 

11.7 

7.7 

1.1 

2.8 

3.0 

6.1 

13.0 

20.6 

33.8 

0.2 

100 

Bank 

2009 

Rs. ’000 

16,098,530 

262,716,527 

4,716,154 

283,531,211 

(8,508,903) 

275,022,308 

(9,956,917) 

265,065,391 

548,125 

7,766,138 

194,640 

8,508,903 

296,089 

9,348,105 

312,723 

9,956,917 

35,394,778 

27,680,809 

5,579,079 

11,628,857 

12,136,544 

21,787,255 

43,967,683 

95,885,557 

137,833,000 

814,155 

392,707,717 

9.0 

7.0 

1.4 

3.0 

3.1 

5.5 

11.3 

24.4 

35.1 

0.2 

100 

2010 

Rs. ’000 

16,421,802 

372,520,486 

12,264,437 

401,206,725 

(8,499,008) 

392,707,717 

(10,119,920) 

382,587,797 

79,517 

8,164,806 

254,685 

8,499,008 

326,757 

9,090,285 

702,878 

10,119,920 

2009 

Rs. ’000 % 

32,486,450 

22,107,979 

3,584,324 

8,359,859 

8,810,347 

21,387,099 

36,262,928 

56,945,481 

92,907,949 

445,876 

283,298,292 

Group 

2009 

Rs. ’000 

16,568,481 

264,382,399 

11,010,500 

291,961,380 

(8,663,088) 

283,298,292 

(10,498,666) 

272,799,626 

548,125 

7,776,751 

338,212 

8,663,088 

319,465 

9,403,879 

775,322 

10,498,666 

11.5 

7.8 

1.3 

3.0 

3.1 

7.4 

12.8 

20.1 

32.8 

0.2 

100



Rs. ‘000 

23. GOVERNMENT OF SRI LANKA RESTRUCTURING BONDS 

Date issued Description 

24.03.1993 For re-capitalisation purposes 

24.03.1993 For settlement of loans 

Total 

4,780,000 

3,767,000 

8,547,000 


Rs. ’000 

24. INVESTMENT SECURITIES 

Equity shares 

Listed equity shares [Note 24 (a)] 

Unlisted equity shares [Note 24 (b)] 

Unlisted preference shares [Note 24 (c )] 

Debt securities 

Listed debentures [Note 24 (d)] 

Asset securitisation bonds (unlisted) [Note 24 (e)] 

Trust certificates [Note 24 (f)] 

Bonds 

Sri Lanka Development Bonds [24 (g)] 

Units in unit trusts [Note 24 (h)] 

Government securities [Note 24 (i)] 

Other investments [Note 24 (j)] 

24. (a) Listed equity shares 



Seylan Bank PLC 

No. of 

ordinary 

shares 

8,185,538 

13,000,000 

2010 

Cost of 

investment 

Rs. ‘000 

691,862 

455,000 

1,146,862 

1,146,862 

3,388,581 

– 

35,240 

– 

197,784 

72,820,570 

1,309,174 

1,745,285 

– 

80,643,496 

2009 

Rs. ‘000 

4,780,000 

3,767,000 

8,547,000 

Rate 

% 

Bank Group 

Market 

value 

Rs. ‘000 

2,860,846 

1,271,400 

4,132,246 

2009 

Rs. ’000 

1,146,862 

98,575 

25,000 

120,000 

13,321 

– 

71,948,559 

1,110,725 

1,381,700 

– 

75,844,742 

Bank 

No. of 

ordinary 

shares 

8,185,538 

13,000,000 

12 

12 

2010 

Rs. ’000 

1,386,793 

3,398,625 

– 

35,973 

– 

197,784 

72,820,570 

1,312,314 

1,745,285 

221,023 

81,118,367 

2009 

Cost of 

investment 

Rs. ‘000 

691,862 

455,000 

1,146,862 

Date of 

maturity 

24.03.2023 

24.03.2023 

2009 

Rs. ’000 

1,360,152 

113,735 

25,000 

120,000 

13,321 

– 

71,948,559 

1,110,725 

1,381,700 

380,050 

76,453,242 

Market 

value 

Rs. ‘000 

1,686,221 

481,000 

2,167,221



24. (b) Unlisted equity shares 

Credit Information Bureau of Sri Lanka 

Fitch Ratings Lanka Limited 

Kandurata Development Bank* 

Kandy Textile Industries Limited 

Lanka Clear (Private) Limited 

Lanka Financial Services Bureau Limited 

Megpek Exports Limited 

Pradeshiya Sanwardhana Bank 

Rajarata Development Bank* 

Ruhunu Development Bank* 

Sabaragamuwa Development Bank* 

Serendib Coconut Products Limited 

Sri Lankan Airlines Limited 

Uva Development Bank* 

Wayamba Development Bank* 

Provision for diminution in value 

No. of 

ordinary 

shares 

47,400 

62,500 

– 

191,790 

2,100,000 

225,000 

300,000 

7,418,448 

– 

– 

– 

37,500 

12,115,571 

– 

– 

2010 

Cost of 

investment 

Rs. ‘000 

42,256 

625 

– 

1,918 

21,000 

2,250 

4,355 

72,000 

– 

– 

– 

375 

3,250,450 

– 

– 

3,395,229 

(6,648) 

3,388,581 

* Development Banks were converted to Pradeshiya Sanwardhana Bank by a Gazette notification on 01 May 2010. 

. 


24. (c) Unlisted preference shares 

Carson Cumberbatch Company PLC 

[Non-voting 14.0% redeemable, cumulative 

preference shares] 


24. (d) Listed debentures 


[6 months gross TB rate plus 185 basis points subject to 

cap of 15.0% Rs. 100/- each matured in June 2010] 

Singer (Sri Lanka) PLC 


cap of 15.5% Rs. 100/- each matured in September 2010] 

Urban Development Authority 

[Fixed rate of 11.0% Rs. 100/- each maturing in 

October 2015] 

No. of 

shares 

No. of 

securities/ 

debentures 

2010 

Cost of 

investment 

Rs. ‘000 

Directors' 

valuation 

Rs. '000 

42,256 

625 

– 

– 

21,000 

2,250 

– 

72,000 

– 

– 

– 

– 

3,250,450 

– 

– 

3,388,581 

3,388,581 

Directors' 

valuation 

Rs. '000 

Bank 

Bank 

No. of 

ordinary 

shares 

27,000 

62,500 

1,200,000 

191,790 

2,100,000 

225,000 

300,000 

– 

1,298,448 

1,200,000 

1,200,000 

37,500 

– 

1,200,000 

1,320,000 

No. of 

shares 

2009 

Cost of 

investment 

Rs. ‘000 

2,700 

625 

12,000 

1,918 

21,000 

2,250 

4,355 

– 

12,000 

12,000 

12,000 

375 

– 

12,000 

12,000 

105,223 

(6,648) 

98,575 

2009 

Cost of 

investment 

Rs. ‘000 

Directors' 

valuation 

Rs. '000 

2,700 

625 

12,000 

– 

21,000 

2,250 

– 

– 

12,000 

12,000 

12,000 

– 

– 

12,000 

12,000 

98,575 

– 

98,575 

Directors' 

valuation 

Rs. '000 

– – – 2,500,000 25,000 25,000 

2010 

Cost of 

investment 

Rs. ‘000 

– – 

Market 

value 

Rs. '000 

Bank 

No. of 

securities/ 

debentures 

25,000 25,000 

2009 

Cost of 

investment 

Rs. ‘000 

Market 

value 

Rs. '000 

– – – 750,000 75,000 75,000 

– – – 450,000 45,000 45,000 

352,400 35,240 35,240 – – – 

35,240 35,240 120,000 120,000



24. (e) Asset securitisation bonds 


[3 months gross TB rate plus 150 basis points matured in May 2010] 

Cost of 

investment 

Rs. ‘000 

24. (f) Trust certificates 

Commercial Leasing Company Limited 197,784 

197,784 


24. (g) Sri Lanka Development Bonds (US$ Bonds) 

Sri Lanka Development Bonds 

(6 months LIBOR plus 275 basis points, matured in July 2010) 

Sri Lanka Development Bonds (6 months LIBOR plus 550 basis points) 











24. (h) Units in Unit Trusts 

Ceybank Unit Trust Investments 

Ceybank Century Growth Fund 

Ceybank Surekum Gilt Edged Fund 

Ceybank Unit Trust - Seed Fund 

No. of 

units 

94,437,649 

7,447,569 

10,000,000 

– 

– 

– 

Date of 

maturity 

15.07.2010 

16.03.2011 

16.03.2011 

29.06.2011 

18.08.2011 

22.09.2012 

23.09.2012 

26.03.2013 

30.06.2013 

15.07.2013 

15.07.2013 

2010 

Cost of 

investment 

Rs. ’000 

1,113,433 

95,741 

100,000 

– 

1,309,174 

2010 

Market 

value 

Rs. '000 

– 

– 

197,784 

197,784 

2010 

Cost of 

investment 

Rs. ’000 

Bank 

– 

557,525 

1,672,575 

557,525 

557,525 

557,525 

557,525 

1,115,050 

1,115,050 

21,743,475 

44,386,795 

72,820,570 

Manager’s 

valuation 

Rs. ’000 

3,970,159 

534,413 

100,500 

– 

4,605,072 

Bank 

Cost of 

investment 

Rs. ‘000 

13,321 

13,321 

– 

– 

Net realisable 

value 

Rs. ’000 

– 

559,331 

1,677,992 

560,898 

560,055 

562,079 

555,199 

1,119,695 

1,120,297 

21,846,865 

44,333,132 

72,895,543 

No. of 

units 

86,699,503 

7,327,748 

– 

4,421,052 

2009 

Bank 

Market 

value 

Rs. '000 

13,321 

13,321 

– 

– 

2009 

Cost ofNet realisable 

investmentvalue 

Rs. ’000Rs. ’000 

22,338,225 

572,775 

1,718,325 

572,775 

572,775 

572,775 

– 

– 

– 

– 

45,600,909 

71,948,559 

2009 

Cost of 

investment 

Rs. ’000 

980,312 

88,413 

– 

42,000 

1,110,725 

22,338,225 

572,775 

1,718,325 

572,775 

572,775 

572,775 

– 

– 

– 

– 

45,600,909 

71,948,559 

Manager’s 

valuation 

Rs. ’000 

1,793,813 

259,475 

– 

91,472 

2,144,760



Cost ofManager’s 

investmentvaluation 

Rs. ’000Rs. ’000 

24. (i) Government securities 

Investment in Government securities 1,745,285 

1,745,285 


24. (a) Listed equity shares 



The Lanka Hospital Corporation PLC 

DFCC Bank 


24. (b) Unlisted equity shares 

Capital Reach Holdings Limited 

Ceylinco Investment Company Limited 

Credit Information Bureau of Sri Lanka 

Fitch Ratings Lanka Limited 

Kandurata Development Bank* 

Kandy Textile Industries Limited 

Lanka Clear (Private) Limited 

Lanka Financial Services Bureau Limited 

MEGA Containers Limited 

Megpek Export Limited 


Rajarata Development Bank* 

Ruhunu Development Bank* 

Sabaragamuwa Development Bank* 

Serendib Coconut Products Limited 

Sri Lankan Airlines Limited 

Uva Development Bank* 

Wayamba Development Bank* 


No. of 

ordinary 

shares 

8,220,538 

13,000,000 

21,329,000 

60,000 

No. of 

ordinary 

shares 

– 

5,000,000 

47,600 

62,500 

– 

191,790 

2,100,000 

225,000 

1,000,000 

300,000 

7,418,448 

– 

– 

– 

37,500 

12,115,571 

– 

– 

1,745,285 

1,745,285 

2010 

Cost of 

investment 

Rs. ‘000 

704,909 

455,000 

213,290 

13,594 

1,386,793 

2010 

Cost of 

investment 

Rs. ‘000 

– 

5,000 

42,300 

625 

– 

1,918 

21,000 

2,250 

10,000 

4,355 

72,000 

– 

– 

– 

375 

3,250,450 

– 

– 

3,410,273 

(11,648) 

3,398,625 

* Development Banks were converted to Pradeshiya Sanwardhana Bank by a Gazette notification on 01 May 2010. 

2009 



Rs. ’000Rs. ’000 

1,381,700 

1,381,700 

Market 

value 

Rs. '000 

2,873,078 

1,271,400 

676,129 

12,012 

4,832,619 

Directors’ 

valuation 

Rs. '000 

– 

5,000 

42,300 

625 

– 

– 

21,000 

2,250 

5,000 

– 

72,000 

– 

– 

– 

– 

3,250,450 

– 

– 

3,398,625 

– 

3,398,625 

Group 

Group 

1,381,700 

1,381,700 

No. of 

ordinary 

shares 

8,185,538 

13,000,000 

21,329,000 

No. of 

ordinary 

shares 

511,500 

5,000,000 

37,100 

62,500 

1,200,000 

191,790 

2,100,000 

225,000 

1,000,000 

300,000 

– 

1,298,448 

1,200,000 

1,200,000 

37,500 

– 

1,200,000 

1,320,000 

2009 

Cost of 

investment 

Rs. ‘000 

691,862 

455,000 

213,290 

1,360,152 

2009 

Cost of 

investment 

Rs. ‘000 

5,115 

5,000 

2,745 

625 

12,000 

1,918 

21,000 

2,250 

10,000 

4,355 

– 

12,000 

12,000 

12,000 

375 

– 

12,000 

12,000 

125,383 

(11,648) 

113,735 

Market 

value 

Rs. '000 

1,686,221 

481,000 

506,564 

2,673,785 

Director’s 

valuation 

Rs. '000 

5,115 

5,000 

2,745 

625 

12,000 

– 

21,000 

2,250 

5,000 

– 

– 

12,000 

12,000 

12,000 

– 

– 

12,000 

12,000 

113,735 

– 

113,735



24. (c) Unlisted preference shares 

Carson Cumberbatch Company PLC 

[Non-voting 14.00% redeemable, cumulative preference shares] 


24. (d) Listed debentures 

HDFC Bank PLC 


cap of 15.00% Rs. 100/- each, matured in June 2010] 

Singer (Sri Lanka) PLC 


cap of 15.50% Rs. 100/- each, matured in September 2010] 

Urban Development Authority 

[Fixed rate of 11.00% Rs. 100/- each maturing in October 2015] 


[Fixed rate of 16.20% Rs. 100/- each, maturing in 

December 2012] 

[Fixed rate of 16.75% Rs. 100/- each, maturing in May 2012] 

[Fixed rate of 13.50% Rs. 100/- each, maturing in July 2011] 

24. (e) Asset securitisation bond 

HDFC Bank PLC 

[3 months gross TB rate plus 150 basis points matured in 

May 2010] 

No. of 

preference 

shares 

No. of 

securities/ 

debentures 

2,000 

3,400 

1,500 

24. (f) Trust certificates 

Commercial Leasing Company Limited – 

– 

2010 

Cost of 

investment 

Rs. ‘000 

– – 

– 

2010 

Cost of 

investment 

Rs. ‘000 

215 

364 

154 

35,973 

Directors’ 

valuation 

Rs. '000 

– 

– 

Market 

value 

Rs. '000 

200 

340 

150 

35,930 

Group 

Group 

No. of 

preference 

shares 

2009 

Cost of 

investment 

Rs. ‘000 

2,500,000 25,000 

No. of 

securities/ 

debentures 

– 

– 

– 

25,000 

2009 

Cost of 

investment 

Rs. ‘000 

– 

– 

– 

120,000 

Director’s 

valuation 

Rs. '000 

25,000 

25,000 

Market 

value 

Rs. '000 

– – – 750,000 75,000 75,000 

– – – 450,000 45,000 45,000 

352,400 35,240 35,240 – – – 

– 

– 

– 

120,000 

– – – – 13,321 13,321 

197,784 

197,784 

197,784 

197,784 

– 13,321 13,321 

– – –



24. (g) Sri Lanka Development Bonds (US$ Bonds) 

Sri Lanka Development Bonds 

(6 months LIBOR plus 275 basis points, matured in July 2010) 












24. (h) Units in Unit Trusts 

Ceybank Unit Trust Investments 

Ceybank Unit Trust - Seed Fund 


Ceybank Surekum Gilt Edged Fund 

Namal Acuity Value Fund 


No. of 

units 

94,437,649 

– 

7,477,569 

10,000,000 

32,800 

2010 

Cost of 

investment 

Rs. ‘000 

24. (i) Government securities 

Investment in Government securities 1,745,285 

1,745,285 


24. (j) Other Investments 

Investment in commercial papers 

Investment in other banks 

Cost of 

investment 

Rs. ‘000 

220,965 

58 

221,023 

Date of 

maturity 

15.07.2010 

16.03.2011 

16.03.2011 

29.06.2011 

18.08.2011 

22.09.2012 

23.09.2012 

26.03.2013 

30.06.2013 

15.07.2013 

15.07.2013 

2010 

Cost of 

investment 

Rs. ‘000 

1,113,433 

– 

95,741 

100,000 

3,140 

1,312,314 

Manager’s 

valuation 

Rs. '000 

1,745,285 

1,745,285 

2010 

Director’s 

valuation 

Rs. '000 

220,965 

58 

221,023 

2010 

Cost of 

investment 

Rs. ’000 

– 

557,525 

1,672,575 

557,525 

557,525 

557,525 

557,525 

1,115,050 

1,115,050 

21,743,475 

44,386,795 

72,820,570 

Manager’s 

valuation 

Rs. '000 

3,970,159 

– 

545,339 

100,500 

2,952 

4,618,950 

Group 

Group 

Group 

Group 

Net realisable 

value 

Rs. ’000 

– 

559,331 

1,677,992 

560,898 

560,055 

562,079 

555,199 

1,119,695 

1,120,297 

21,846,865 

44,333,132 

72,895,543 

2009 



Rs. ‘000Rs. '000 

1,381,700 

1,381,700 

Cost of 

investment 

Rs. ‘000 

380,000 

50 

380,050 

2009 

No. of 

units 

86,699,503 

4,421,052 

7,327,748 

– 

– 

1,381,700 

1,381,700 

Director’s 

valuation 

Rs. '000 

380,000 

50 

380,050 

2009 

Cost ofNet realisable 

investmentvalue 

Rs. ’000Rs. ’000 

22,338,225 

572,775 

1,718,325 

572,775 

572,775 

572,775 

– 

– 

– 

– 

45,600,909 

71,948,559 

2009 

Cost of 

investment 

Rs. ‘000 

980,312 

42,000 

88,413 

– 

– 

1,110,725 

22,338,225 

572,775 

1,718,325 

572,775 

572,775 

572,775 

– 

– 

– 

– 

45,600,909 

71,948,559 

Manager’s 

valuation 

Rs. '000 

1,793,813 

91,472 

259,475 

– 

– 

2,144,760


25. INVESTMENT PROPERTIES 

Cost 



Transfers/adjustments 



Less: Accumulated depreciation 


Charge for the year 


Released on disposal 


Net investment properties 

2010 

Rs. ’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

Bank 

No investment properties held by the Bank both for the current year as well as for the previous year. 


Building 

(sq.ft) 

25.1 INVESTMENT PROPERTIES HELD BY THE GROUP 

No. 64 & 66, Nonagama Road, Pallegama, Embilipitiya. 

* 

Lot No. 2 & 3 of Muttuweowita. (Acquired by RDA) 

* 

No. 300/8, Thalawathugoda Road, Madiwela, Kotte. 

* 2,478 

No. 385/1, Kotte Road, Pittakotte. 

2,896 

No. 19, Galle Road, Angoda, Bentota. 

961 

No. 116, 116/1, 118, 120, 1st Cross Street, Colombo 11. (Sold 90%) * 

No. 43, 45, 49, 51 & 53, New Olcott Mawatha, Colombo 11. * – 

No. 102 & 104, Dam Street, Colombo 12. 

* 7,925 

Kumbuththukuliya Watta, Bangadeniya Road, Puttalam. 

* – 

Mirissawelawatta Hena, Thekka Watta, Dambadeniya. 

* – 

Rukgahakottunuwa, Gehenuwala, Meepe. 

– 

No. 299, Union Place, Colombo 02. 

* 10,456 

No. 50/21, Old Kesbewa Road, Raththanapitiya, Boralesgamuwa. 

Total 

** 44,877 

2009 

Rs. ’000 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

– 

16.61p 

20.40p 

16.15p 

19.01p 

2R-00.00p 

12.35p 

9.76p 

1R-10.70p 

2.00A 

1A-0R-28.00p 

38.33p 

50.00p 

2A-1R-4.35p 

2010 

Rs. ’000 

396,914 

2,659 

– 

(4,798) 

394,775 

5,184 

3,074 

– 

(350) 

7,908 

386,867 

Extent Land 

Rs '000 

1,750 

714 

2,465 

2,958 

– 

1,249 

9,950 

17,970 

600 

162 

2,418 

225,085 

65,604 

330,925 

Group 

2009 

Rs. ’000 

Cost 

Building 

Rs '000 

– 

– 

2,635 

1,730 

– 

– 

– 

4,989 

– 

– 

– 

10,100 

44,396 

63,850 

431,181 

110,398 

(144,215) 

(450) 

396,914 

2,431 

3,060 

(307) 

– 

5,184 

391,730 

2010 

Total 

Rs '000 

1,750 

714 

5,100 

4,688 

– 

1,249 

9,950 

22,959 

600 

162 

2,418 

235,185 

110,000 

394,775 

Fair value 

Total 

Rs '000 

13,000 

1,000 

5,012 

5,298 

– 

1,249 

35,000 

56,029 

3,400 

600 

890 

225,344 

229,075 

575,897 

Cost 

Total 

Rs '000 

1,750 

714 

5,100 

4,688 

2,989 

1,249 

9,950 

22,109 

600 

162 

2,418 

235,185 

110,000 

396,914 

Note 

* The fair value of the investment properties as at 31 December 2010 was based on market valuations carried out by Mr. D N Dhammika Baranage [RICS (UK), DIV AIS (SL)] and Mr. H A W Perera [BSc Estate 

Management and Valuation (Special)], who are independent valuers not connected with the Group. The Directors have reviewed values of other investment properties as at 31 December 2010 and concluded 

that there were no impairment. 

** Professional valuation has been carried out by Mr. A G Gunarathna [BSc Estate Management and Valuation, FIV (Sri Lanka)], incorporated valuer on basis of Market Approach (Direct Comparison Method) 

on 24 July 2009. 

2009 

Fair value 

Total 

Rs '000 

3,000 

1,000 

5,012 

5,298 

5,816 

22,500 

35,000 

56,029 

2,000 

2,560 

890 

225,344 

229,075 

593,524



26. INVESTMENTS IN ASSOCIATE 

COMPANIES 

26.1 UNQUOTED 


(3,495,000 Ordinary shares) 

(Incorporated in Sri Lanka) 




Southern Development Financial Company 

Limited (2,500,001 Ordinary shares) 


Transnational Lanka Records Solutions 

(Private) Limited (2,000,000 Ordinary shares) 








Total investment in Associate Companies 


Net investment in Associate Companies 

Group’s 

interest in 

stated 

capital 

% 

2010 

Cost 

Market 

value/ 

Directors’ 

valuation 

Bank 

Group’s 

interest in 

stated 

capital 

% 

2009 

Cost 

Market 

value/ 

Directors’ 

valuation 

Equity 

value 

2010 

Market 

value/ 

Directors’ 

valuation 

Group 

Equity 

value 

Rs. ’000 Rs. ‘000 

Rs. ’000 Rs. ’000 Rs. ’000 Rs. ‘000 Rs. ’000 

867,988 

(23,330) 

26.2 MOVEMENT IN INVESTMENTS IN ASSOCIATE COMPANIES 

Value as at 01 January 

Increase/(decrease) in investment 

Share of profit/(loss) before tax 

Share of tax 

Dividends 

Other adjustments 

Value as at 31 December 

26.3 MOVEMENT IN PROVISION FOR DIMINUTION IN VALUE 




844,658 844,658 

844,658 867,988 

(23,330) 

2009 

Market 

value/ 

Directors’ 

valuation 

Rs. ‘000 

40.92 41,940 41,940 40.92 41,940 41,940 171,607 171,607 134,081 134,081 

40.00 750,000 750,000 40.00 750,000 750,000 905,937 905,937 832,400 832,400 

41.67 25,000 1,670 41.67 25,000 1,670 53 53 692 692 

24.69 20,000 20,000 24.69 20,000 20,000 33,605 33,605 29,177 29,177 

43.36 31,048 31,048 49.60 31,048 31,048 61,558 61,558 54,560 54,560 

49.08 – – 49.88 – – 111,803 111,803 33,155 33,155 

2010 

Rs. ’000 

867,988 

– 

– 

– 

– 

– 

867,988 

2010 

Rs. ’000 

23,330 

– 

23,330 

844,658 1,284,563 1,284,563 1,084,065 1,084,065 

844,658 844,658 1,284,563 1,284,563 1,084,065 1,084,065 

Bank 

Cost 

Bank 

2009 

Rs. ’000 

841,940 

26,048 

– 

– 

– 

– 

867,988 

2009 

Rs. ’000 

23,330 

– 

23,330 

2010 

Rs. ’000 

1,084,065 

80,364 

212,898 

(55,384) 

(42,713) 

5,334 

1,284,564 

2010 

Rs. ’000 

– 

– 

– 

Group 

Equity value 

2009 

Rs. ’000 

956,370 

26,048 

130,653 

(21,109) 

(4,675) 

(3,222) 

1,084,065 

Group 

2009 

Rs. ’000 

– 

– 

–



Rs. ’000 

26.4 THE GROUP'S INTEREST IN THE SUMMARISED FINANCIAL 

INFORMATION OF THE ASSOCIATES ARE AS FOLLOWS: 

Total assets 



Total operating income 

Total operating expenses 


Provision for taxation 

Profit after taxation 

3,914,506 

2,619,263 

740,817 

(527,919) 

212,898 

(55,384) 

157,514 


Rs. ’000 

27. INVESTMENT IN SUBSIDIARY COMPANIES 

Investment in quoted companies (Note 27.2) 

Investment in unquoted companies (Note 27.3) 

Total investment in subsidiary companies 

Provision for diminution in value (Note 27.5) 

Net investment in Subsidiary Companies 

27.1 MOVEMENT IN INVESTMENT IN SUBSIDIARIES 


Increase/(decrease) in investment 



27.2 QUOTED 


(61,485,050 Ordinary shares ) 



(97,392,136 Ordinary shares ) 


Group’s interest 

in stated capital 

% 

2,862,705 

3,233,519 

6,096,224 

(817,130) 

5,279,094 

4,008,989 

2,087,235 

6,096,224 

2010 

Cost 

Rs. ’000 

2009 

Rs. ’000 

2,673,026 

2,602,178 

682,975 

(552,322) 

130,653 

(21,109) 

109,544 

Bank Group 

2009 

Rs. ’000 

2,862,705 

1,146,284 

4,008,989 

(817,130) 

3,191,859 

3,601,084 

407,905 

4,008,989 

Market value/ 

Directors’ value 

Rs. ’000 

Bank 

2010 

Rs. ’000 

– 

– 

– 

– 

– 

– 

– 

– 



% 

2009 

Rs. ’000 

– 

– 

– 

– 

– 

– 

– 

– 

2009 

CostMarket value/ 


Rs. ’000Rs. ’000 

93.16 740,070 2,766,827 93.16 740,070 1,767,695 

72.14 2,122,635 4,460,560 72.14 2,122,635 1,899,147 

Investment in quoted Subsidiary Companies 2,862,705 7,227,387 2,862,705 3,666,842



27.3 UNQUOTED 

BoC Management & Support Services (Private) Limited 

(100,000 Ordinary shares) 


BoC Property Development & Management 










Merchant Credit of Sri Lanka Limited 








(Incorporated in United Kingdom) 

Investment in unquoted Subsidiary Companies 



% 

2010 

Cost 

Rs. ’000 

Market value/ 


Rs. ’000 

Bank 



% 

2009 

CostMarket value/ 


Rs. ’000Rs. ’000 

100.00 1,000 1,000 100.00 1,000 1,000 

100.00 1,010,000 1,010,000 100.00 1,010,000 1,010,000 

100.00 2,500 2,500 100.00 2,500 2,500 

99.99 737 737 98.23 737 737 

85.79 22,047 22,047 85.79 22,047 22,047 

55.00 110,000 110,000 55.00 110,000 110,000 

100.00 2,087,235 2,087,235 – – – 

3,233,519 3,233,519 1,146,284 1,146,284 

In addition to the above Subsidiaries, Ceybank Holiday Homes (Private) Limited, MBSL Insurance Company Limited and Koladeniya Hydropower (Private) 

Limited are indirect Subsidiaries of the Bank. 

27.4 INVESTMENTS IN SUBSIDIARIES DURING THE YEAR 

1. Bank of Ceylon (UK) Limited 

The Financial Services Authority (FSA), the regulator of the Financial Services Industry in the United Kingdom, required that the London branch of the 

Bank be converted to a Subsidiary of Bank of Ceylon that will be operated with its own capital base, management and Board of Directors. As a result, 

Bank of Ceylon branch in London was converted to a fully-owned Subsidiary during the year 2010 and named ‘Bank of Ceylon (UK) Limited’. Total 

investment is GBP 12,119,612/-. 

2. Koladeniya Hydropower (Private) Limited 

Koladeniya Hydropower (Private) Limited was acquired by Property Development PLC, Subsidiary of Bank of Ceylon during the year 2010 and became a 

Subsidiary of Bank of Ceylon through indirect holding of its stated capital. 

Group’s interest in the voting shares 

Amount invested (Rs.) 

Post-acquisition (loss)/profit to Group 

account for the financial year 2010 (Rs.) 

27.5 MOVEMENT IN PROVISION FOR DIMINUTION IN VALUE 




: 88.12% 

: 23,625,000/- 

: (1,090,783/-) 

2010 

Rs. ’000 

817,130 

– 

817,130 

Bank 

2009 

Rs. ’000 

817,130 

– 

817,130 

2010 

Rs. ’000 

– 

– 

– 

Group 

2009 

Rs. ’000 

– 

– 

–



Rs. ’000 

28. OTHER ASSETS 

Accrued interest and other receivables 

Consumable stock in hand 

Foreign cheques purchased 

Local cheques purchased 



29. PROPERTY, PLANT & EQUIPMENT 

BANK 

29.1 COST OR VALUATION 

As at 01 January 



Exchange rate adjustments 

Transfer to Bank of Ceylon (UK) Limited 

Work-in-progress capitalised 



Accumulated Depreciation 








Net book value as at 

31 December 2010 



Freehold 

land 

Freehold 

building 

10,238,043 

338,357 

102,994 

1,236,611 

5,790,263 

17,706,268 

Leasehold 

building 

Bank Group 

2009 

Rs. ’000 

9,002,621 

284,242 

84,721 

1,414,411 

8,398,454 

19,184,449 

Equipment Motor 

vehicles 

Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 

1,566,606 

26,319 

– 

– 

– 

– 

– 

1,592,925 

– 

– 

– 

– 

– 

– 

– 

1,592,925 

1,566,606 

1,767,530 

8,581 

– 

– 

(432,817) 

10,613 

– 

1,353,907 

388,917 

40,452 

– 

– 

(63,421) 

– 

365,948 

987,959 

1,378,613 

615,472 

112,336 

(75) 

– 

– 

75,954 

– 

803,687 

332,166 

31,505 

(25) 

– 

– 

– 

363,646 

440,041 

283,306 

6,419,846 

645,393 

(120,461) 

(984) 

(76,097) 

– 

(1,683) 

6,866,014 

4,426,318 

631,771 

(118,980) 

(968) 

(74,575) 

– 

4,863,566 

2,002,448 

1,993,528 

468,661 

132,263 

(25,878) 

76 

– 

– 

– 

575,122 

267,430 

71,858 

(25,338) 

61 

– 

– 

314,011 

261,111 

201,231 

2010 

Rs. ’000 

10,620,946 

410,819 

102,994 

1,236,611 

5,942,280 

18,313,650 

Leasehold 

motor 

vehicles 

Rs. '000 

33,595 

16,793 

– 

– 

– 

– 

– 

50,388 

10,557 

9,407 

– 

– 

– 

– 

19,964 

30,424 

23,038 

2009 

Rs. ’000 

9,266,588 

349,381 

84,721 

1,414,411 

8,659,547 

19,774,648 

Capital 

work-inprogress 

214,431 

229,095 

– 

– 

– 

(213,845) 

– 

229,681 

– 

– 

– 

– 

– 

– 

– 

229,681 

214,431 

Total Total 

2010 

Rs. '000 

11,086,141 

1,170,780 

(146,414) 

(908) 

(508,914) 

(127,278) 

(1,683) 

11,471,724 

5,425,388 

784,993 

(144,343) 

(907) 

(137,996) 

– 

5,927,135 

5,544,589 

– 

5,544,589 

2009 

Rs. '000 

9,836,873 

1,390,829 

(116,599) 

51,227 

– 

– 

(76,189) 

11,086,141 

4,826,427 

686,428 

(94,512) 

14,598 

– 

(7,553) 

5,425,388 

– 

5,660,753 

5,660,753


29.1.1 Details of freehold lands & buildings held by the Bank as at 31 December 2010 

Name of Premises Extent 

(Perches) 

Central Province 

Galaha Branch 

No. 59/37, Deltota Road, Galaha 

Gampola Branch 

No. 44, Kadugannawa Road, Gampola 

Hatton Branch 

No. 46, Circular Road, Hatton 

Hatton Staff Quarters 

Hatton 

Kandy 2nd City Branch 

No. 22, Dalada Veediya, Kandy 

Maskeliya Branch 

No. 66, Upcot Road, Maskeliya 

Nawalapitiya Branch 

No. 6, Gampola Road, Nawalapitiya 

Nuwara Eliya Branch 

No. 43, Lawson Street, Nuwara Eliya 

Nuwara Eliya Staff Quarters 

No. 14, 19, Hill Street, Nuwara Eliya 

Nuwara Eliya Property 

No. 12, Hill Street, Nuwara Eliya 

Talawakelle Branch 

No. 23, 25, 29, Hatton Road, Talawakelle 

Talawakelle Staff Quarters 

Talawakelle Estate Plantation 

Eastern Province 

Batticaloa Branch 

Covington Road, Batticaloa 

Mutur Branch 

No. 38, Batticaloa Road, Mutur 

Pottuvil Branch 

Main Street, Pottuvil 

Trincomalee Branch 

No. 24, Inner Harbour Road, Trincomalee 

Valachchenai Branch 

Main Street, Valachchenai 

15.00 

175.00 

85.65 

40.00 

42.81 

42.05 

15.00 

133.50 

53.69 

27.54 

25.30 

160.00 

65.00 

40.27 

10.70 

90.00 

47.34 

Building 

(Square Feet) 

6,340 

9,270 

8,784 

5,560 

9,017 

6,402 

6,317 

13,645 

5,086 

3,070 

5,045 

4,898 

8,137 

2,226 

4,976 

9,432 

6,391 

Cost/ 

Revaluation 

of Land 

Rs. ’000 

1,500 

875 

5,000 

4,000 

34,500 

2,000 

3,066 

85,000 

8,000 

7,015 

2,500 

2,000 

155,456 

16 

1,260 

1,000 

15 

285 

2,576 

Cost/ 

Revaluation 

of Building 

Rs. ’000 

5,543 

10,287 

8,406 

7,300 

34,335 

3,333 

13,127 

14,889 

2,500 

12,291 

8,854 

7,000 

127,865 

5,464 

819 

1,307 

5,114 

7,103 

19,807 

Total 

Value 

Rs. ’000 

7,043 

11,162 

13,406 

11,300 

68,835 

5,333 

16,193 

99,889 

10,500 

19,306 

11,354 

9,000 

283,321 

5,480 

2,079 

2,307 

5,129 

7,388 

22,383 

Accumulated 

Depreciation 

Rs. ’000 

1,028 

4,815 

1,522 

1,417 

16,883 

614 

1,936 

3,009 

485 

4,020 

1,353 

1,359 

38,441 

3,976 

614 

230 

2,177 

2,555 

9,552 

Net Book 

Value 

Rs. ’000 

6,015 

6,347 

11,884 

9,883 

51,952 

4,719 

14,257 

96,880 

10,015 

15,286 

10,001 

7,641 

244,880 

1,504 

1,465 

2,077 

2,952 

4,833 

12,831



(Perches) 

Northern Province 

Jaffna Area Office 

No. 476, 476A, Hospital Road, Jaffna 

Jaffna Branch 

No. 56, Stanley Road, Jaffna 

Mannar Branch 

No. 52, Pallimunai Road, Grand Bazaar, Mannar 

Nelliady Branch 

Thikkam Road, Karaveddy, Nelliady 

North-Western Province 

Alawwa Branch 

No. 64, Giriulla Road, Alawwa 

Chilaw Branch 

Radaguru Edmund Peiris Mawatha, Chilaw 

Dummalasuriya Branch 

No. 227, Kuliyapitiya-Madampe Road, Dummalasuriya 

Kurunegala Province Office, AGM’s Quarters & Chief 

Manager’s Quaters 

No. 18, Mihindu Mawatha, Kurunegala 

Kurunegala Branch 

Commercial Complex, Kurunegala 

Kurunegala Bazaar Branch 

No. 34, Colombo Road, Kurunegala 

Madampe Branch 

No. 10, Station Road, Madampe 

Madurankuliya Branch 

No. 66 , Colombo Road, Madurankuliya 

Narammala Branch 

No. 139, Negombo Road, Narammala 

Puttalam Area Office 

No. 53, Kurunegala Road, Puttalam 

– 

164.27 

– 

42.74 

31.80 

43.50 

41.80 

225.00 

– 

53.00 

61.10 

279.00 

117.50 

72.26 

Building 

(Square Feet) 

7,300 

9,775 

5,720 

– 

7,305 

3,640 

5,353 

17,210 

15,100 

8,915 

6,565 

– 

5,970 

2,000 

Cost/ 

Revaluation 

of Land 

Rs. ’000 

– 

115 

– 

15,686 

15,801 

4,000 

14,000 

3,500 

45,000 

– 

55,000 

4,053 

445 

5,500 

18 

131,516 

Cost/ 

Revaluation 

of Building 

Rs. ’000 

3,027 

4,388 

2,318 

– 

9,733 

5,070 

8,981 

5,000 

18,871 

15,604 

19,569 

6,292 

– 

3,319 

281 

82,987 

Total 

Value 

Rs. ’000 

3,027 

4,503 

2,318 

15,686 

25,534 

9,070 

22,981 

8,500 

63,871 

15,604 

74,569 

10,345 

445 

8,819 

299 

214,503 

Accumulated 

Depreciation 

Rs. ’000 

2,203 

2,450 

1,865 

– 

6,518 

977 

1,698 

971 

3,442 

6,825 

3,764 

1,172 

– 

507 

281 

19,637 

Net Book 

Value 

Rs. ’000 

824 

2,053 

453 

15,686 

19,016 

8,093 

21,283 

7,529 

60,429 

8,779 

70,805 

9,173 

445 

8,312 

18 

194,866



(Perches) 

Sabaragamuwa Province 

Balangoda Branch 

No. 137, Main Street, Balangoda 

Dehiowita Branch 

No. 62, Main Street, Dehiowita 

Kegalle Branch 

No. 110, Colombo Road, Kegalle 

Rambukkana Branch 

No. 8A, Diyasunnatha Mawatha, Rambukkana 

Ratnapura Branch 

No. 6, Dharmapala Mawatha, Ratnapura 

Ratnapura Branch - (BMC.1/L) 

No. 58, Main Street, Ratnapura 

Southern Province 

Ambalangoda Branch 

No. 274, Main Street, Ambalangoda 

Ambalantota Branch 

No. 11, Wanduruppa Road, Ambalantota 

Galle Province Office 

No. 2, Light House Street, Fort, Galle 

Galle Branch 

No. 2, Gamini Road, Galle 

Hakmana Branch 

Beliatta Road, Hakmana 

Imaduwa Branch 

Ahangama Road, Imaduwa 

Matara Branch 

No. 11, Kumaratunga Mawatha, Matara 

Matara Bazaar Branch 

Gunawardena Mawatha, Matara 

Tangalle Branch 

No. 145/147, Sea Street, Tangalle 

Weligama Branch 

No. 239, Main Street, Weligama 

Uva Province 

Badulla Uva Province Office 

Bank Road, Badulla 

Bandarawela Branch 

No. 198 B, Badulla Road, Bandarawela 

Haputale Branch 

No. 20, Station Road, Haputale 

Monaragala Branch & Manager’s Quarters 

No. 401, Wellawaya Road, Moneragala 

Moneragala Staff Quarters 

No. 401, Wellawaya Road, Moneragala 

14.50 

38.60 

131.38 

27.25 

100.00 

31.69 

58.00 

38.00 

32.63 

31.50 

36.70 

83.50 

104.50 

49.25 

21.05 

97.50 

118.75 

9.52 

90.10 

230.00 

– 

Building 

(Square Feet) 

3,556 

2,088 

18,023 

4,500 

9,013 

– 

6,041 

13,060 

12,570 

3,250 

2,300 

13,514 

– 

– 

8,500 

9,048 

7,731 

4,775 

9,033 

3,042 

– 

Cost/ 

Revaluation 

of Land 

Rs. ’000 

8,500 

1,500 

17,000 

2,600 

20,000 

10,439 

60,039 

12,166 

2,250 

4,000 

6,300 

263 

3,000 

21,000 

14,038 

13,134 

831 

76,982 

7,000 

7,500 

– 

45 

18 

14,563 

Cost/ 

Revaluation 

of Building 

Rs. ’000 

941 

3,073 

21,307 

10,674 

8,491 

44,486 

– 

– 

929 

9,611 

10,388 

3,823 

3,194 

13,102 

6,165 

47,212 

6,104 

8,500 

7,364 

16,474 

– 

– 

440 

38,882 

Total 

Value 

Rs. ’000 

9,441 

4,573 

38,307 

13,274 

28,491 

10,439 

104,525 

12,166 

3,179 

13,611 

16,688 

4,086 

6,194 

34,102 

14,038 

13,134 

6,996 

124,194 

13,104 

16,000 

7,364 

16,519 

458 

53,445 

Accumulated 

Depreciation 

Rs. ’000 

174 

540 

4,030 

1,989 

1,572 

8,305 

– 

– 

113 

1,829 

3,179 

1,602 

589 

2,738 

2,478 

12,528 

1,139 

1,661 

2,778 

7,259 

– 

– 

349 

13,186 

Net Book 

Value 

Rs. ’000 

9,267 

4,033 

34,277 

11,285 

26,919 

10,439 

96,220 

12,166 

3,066 

11,782 

13,509 

2,484 

5,605 

31,364 

14,038 

13,134 

4,518 

111,666 

11,965 

14,339 

4,586 

9,260 

109 

40,259



(Perches) 

Western Province North 

Borella Branch 

No. 71, Danister de Silva Mawatha, Borella 

Colombo 1 - City Office 

No. 41, Bristol Street, Colombo 1 

Colombo 1 - Grand Oriental Hotel 

York Sreet, Colombo 1 

Grandpass Branch 

No. 703, Sirimavo Bandaranaike Mawatha, Grandpass 

Ja-Ela Branch 

No. 19, Negombo Road, Ja-Ela 

Kadawatha Branch 

No. 469, Ragama Road, Kadawatha 

Negombo Branch 

No. 118, Rajapakse Broadway, Negombo 

Pettah Branch 

No. 212/63, Gas Work Street, Colombo 11 

Western Province South 

Aluthgama Branch 

No. 267, Galle Road, Aluthgama 

Bambalapitiya Branch 

No. 10, Unity Plaza Building, Galle Road, Colombo 4 

Beruwala Branch 

No. 165 A, Galle Road, Beruwala 

Dehiwala Branch 

No. 207, Galle Road, Dehiwala 

Horana Branch 

No. 87, Anguruwathota Road, Horana 

Idama Branch 

No. 707, Galle Road, Moratuwa 

Kalutara Area Office 

No. 108, Old Road, Kalutara 

Kalutara Branch 

No. 218, Galle Road, Kalutara South, Kalutara 

Maharagama Branch 

No. 88, High Level Road, Maharagama 

Matugama Branch 

No. 72, Agalawatte Road, Matugama 

Nugegoda Branch 

No. 174, High Level Road, Nugegoda, 

Panadura Branch 

No. 4, Super Grade Branch, Susantha Mawatha, 

Panadura 

Wadduwa Branch 

No. 557 A, Galle Road, Wadduwa 

Wellawatte Branch 

No. 149, Galle Road, Colombo 6 

42.62 

39.50 

181.85 

20.12 

40.64 

28.86 

97.25 

28.29 

36.60 

– 

21.50 

22.00 

70.00 

61.12 

22.50 

40.86 

80.00 

9.50 

30.50 

80.00 

29.00 

51.25 

Building 

(Square Feet) 

19,195 

24,952 

232,801 

6,295 

8,090 

6,181 

16,754 

24,530 

– 

7,776 

5,418 

12,715 

8,078 

7,550 

3,060 

9,885 

45,245 

2,883 

38,108 

6,490 

– 

15,798 

Cost/ 

Revaluation 

of Land 

Rs. ’000 

30,000 

100,000 

467,225 

12,000 

14,158 

10,000 

55,000 

28,440 

716,823 

3,435 

– 

26,319 

2,225 

6,000 

8,000 

4,500 

17,000 

11,438 

4,500 

95,000 

4,000 

3,179 

20,510 

206,106 

Cost/ 

Revaluation 

of Building 

Rs. ’000 

44,940 

50,863 

349,095 

10,576 

10,989 

11,561 

15,259 

44,238 

537,521 

– 

36,348 

10,613 

25,360 

12,819 

23,305 

2,500 

7,773 

16,267 

3,959 

41,564 

7,910 

– 

32,669 

221,087 

Total 

Value 

Rs. ’000 

74,940 

150,863 

816,320 

22,576 

25,147 

21,561 

70,259 

72,678 

1,254,344 

3,435 

36,348 

36,932 

27,585 

18,819 

31,305 

7,000 

24,773 

27,705 

8,459 

136,564 

11,910 

3,179 

53,179 

427,193 

Accumulated 

Depreciation 

Rs. ’000 

8,423 

11,349 

81,642 

1,655 

1,859 

2,221 

3,384 

20,538 

131,071 

– 

17,063 

44 

8,938 

3,824 

4,590 

596 

1,904 

7,001 

730 

11,631 

3,410 

– 

11,436 

71,167 

Net Book 

Value 

Rs. ’000 

66,517 

139,514 

734,678 

20,921 

23,288 

19,340 

66,875 

52,140 

1,123,273 

3,435 

19,285 

36,888 

18,647 

14,995 

26,715 

6,404 

22,869 

20,704 

7,729 

124,933 

8,500 

3,179 

41,743 

356,026



(Perches) 

Holiday Homes and Rests 

Badulla Fernham Bungalow & Property 

No. 153, Spring Valley Road, Badulla 

Bandarawela Holiday Home 

Bandarawela 

Dickoya Upper/Lower Glencarn Bungalow 

Dickoya 

Haputale Woodland Bungalow 

Haputale 

Lindula Ridge Holiday Home 

Lindula 

Nuwara Eliya Holiday Home 

No. 16, Hill Street, Nuwara Eliya 


General Manager's Bungalow 

No. 75, Ananda Kumaraswamy Mawatha, Colombo 7 

Colombo Darley Road, Stores, Browns Building, 

No. 497, T B Jayah Mawatha, Colombo 10 

World Trade Centre 

No. 8, Bank of Ceylon Mawatha,Colombo 1 

Kollupitiya - Walkers Sons Ltd. 

No. 28, St. Michael’s Road, Cololmbo 3 

Maharagama - Central Training Institute 

No. 88, High Level Road, Maharagama 

Total freehold land and building 

222.25 

115.00 

– 

– 

– 

185.06 

79.80 

151.00 

57.00 

105.10 

– 

Building 

(Square Feet) 

4,580 

3,028 

7,807 

3,005 

3,412 

3,388 

7,450 

22,337 

6,935 

– 

36,775 

Cost/ 

Revaluation 

of Land 

Rs. ’000 

1,071 

45 

– 

– 

– 

200 

1,316 

80,000 

96,999 

23,311 

11,437 

– 

211,747 

1,592,925 

Cost/ 

Revaluation 

of Building 

Rs. ’000 

7,093 

2,226 

10,138 

5,559 

5,130 

2,669 

32,815 

8,421 

7,473 

129,389 

46,229 

– 

191,512 

1,353,907 

Total 

Value 

Rs. ’000 

8,164 

2,271 

10,138 

5,559 

5,130 

2,869 

34,131 

88,421 

104,472 

129,389 

23,311 

57,666 

403,259 

2,946,832 

Accumulated 

Depreciation 

Rs. ’000 

1,958 

1,214 

3,502 

1,862 

1,451 

1,106 

11,093 

1,588 

3,055 

19,946 

19,861 

– 

44,450 

365,948 

Net Book 

Value 

Rs. ’000 

6,206 

1,057 

6,636 

3,697 

3,679 

1,763 

23,038 

86,833 

101,417 

109,443 

23,311 

37,805 

358,809 

2,580,884



GROUP 

29.2 COST OR VALUATION 





Transfer from equipment to 

freehold building 




Accumulated depreciation 





Transfer from equipment to 

freehold building 







Freehold 

land 

Freehold 

building 

Leasehold 

building 

Equipment Motor 

vehicles 

Rs. '000 Rs. '000 Rs. '000 Rs. '000 Rs. '000 

1,566,606 

26,319 

– 

– 

– 

– 

– 

1,592,925 

– 

– 

– 

– 

– 

– 

– 

1,592,925 

1,566,606 

3,801,613 

20,090 

– 

– 

386,190 

41,808 

9,019 

4,258,720 

1,190,915 

100,792 

– 

– 

380,955 

(63,420) 

1,609,242 

2,649,478 

2,610,698 

615,475 

112,336 

(75) 

– 

– 

75,954 

– 

803,690 

332,167 

31,503 

(25) 

– 

– 

– 

363,645 

440,045 

283,308 

7,204,244 

683,067 

(120,502) 

(984) 

(386,190) 

20,285 

(66,725) 

7,333,195 

5,118,808 

665,175 

(119,019) 

(967) 

(380,955) 

(75,344) 

5,207,698 

2,125,497 

2,085,436 

531,162 

145,859 

(38,180) 

76 

– 

– 

– 

638,917 

294,102 

82,739 

(34,578) 

61 

– 

(1,574) 

340,750 

298,167 

237,060 

Leasehold 

motor 

vehicles 

Rs. '000 

33,595 

16,793 

– 

– 

– 

– 

– 

50,388 

10,557 

9,407 

– 

– 

– 

– 

19,964 

30,424 

23,038 

Capital 

work-inprogress 

265,911 

229,095 

– 

– 

– 

(265,324) 

4,090 

233,772 

– 

– 

– 

– 

– 

– 

– 

233,772 

265,911 

Total Total 

2010 

Rs. '000 

14,018,606 

1,233,559 

(158,757) 

(908) 

– 

(127,277) 

(53,616) 

14,911,607 

6,946,549 

889,616 

(153,622) 

(906) 

– 

(140,338) 

7,541,299 

7,370,308 

– 

7,370,308 

29.2 (a) 

1. Revaluation 

A revaluation of freehold properties was carried out in 2010 by professionally qualified independent valuers based on open market value of existing use 

and no losses in value have been identified. However, the revaluation gains were not transferred to the revaluation reserve as at December 2010. It will 

subsequently be included in the Financial Statements with the permission of the Monetary Board of Central Bank of Sri Lanka. 

The surplus realised by the revaluation carried out in 2003, a sum of Rs. 2,057 million has been transferred to the revaluation reserve of the Bank. Further, as 

there is no reduction in the value of assets a provision for impairment was not required to be made in the Financial Statements of 2010. 

2. The detailed classification of the ‘equipment’ is given in Note No. 29.10 (a) & (b). 

3. Capital work-in-progress which is accounted for on the basis of value of work certified includes mobilisation of advances and other construction expenses. 

4. The amount of commitments for the acquisition of property, plant & equipment is given in the Note No. 43.1 (a). 

29.3 TITLE RESTRICTION ON PROPERTY, PLANT & EQUIPMENT 

There were no restrictions that existed in the title of the property, plant & equipment of the Bank and the Group as at the Balance Sheet date. 

29.4 PROPERTY, PLANT & EQUIPMENT PLEDGED AS SECURITY FOR LIABILITIES 

No freehold property, plant & equipment have been pledged as security for any liability. 

29.5 COMPENSATION FROM THIRD PARTIES FOR ITEMS OF PROPERTY, PLANT & EQUIPMENT 

There were no compensation received/receivable from third parties for items of property, plant & equipment which were impaired, lost or given up. 

2009 

Rs. '000 

12,701,259 

1,452,873 

(124,454) 

51,228 

– 

– 

(62,300) 

14,018,606 

6,273,023 

790,745 

(105,931) 

14,598 

– 

(25,886) 

6,946,549 

– 

7,072,057 

7,072,057


29.6 FULLY DEPRECIATED PROPERTY, PLANT & EQUIPMENT 

The initial cost of fully-depreciated property, plant & equipment at the end of year 2010, which are still in use are as follows: 


Rs. ’000 

Motor vehicles 

Computer equipment 

Computer software (Intangible) 

Equipment, furniture & fittings 

Leasehold building 

Machines, plant & machinery 

96,250 

1,458,630 

1,177,284 

357,531 

56,764 

427,588 

3,574,047 

29.7 TEMPORARILY IDLE PROPERTY, PLANT & EQUIPMENT 

There were no temporarily idle property, plant & equipment as at the Balance Sheet date. 

Bank Group 

2009 

Rs. ’000 

44,786 

1,008,575 

1,023,906 

333,205 

46,471 

398,513 

2,855,456 

2010 

Rs. ’000 

103,055 

1,465,876 

1,177,650 

461,800 

56,764 

429,420 

3,694,565 

29.8 PROPERTY, PLANT & EQUIPMENT RETIRED FROM ACTIVE USE 

The Bank held no property, plant & equipment retired from active use and which were not classified as held for sale in accordance with 

Sri Lanka Accounting Standard No. 38 - ‘Non-Current Assets Held for Sale and Discontinued Operations’ (Revised 2006). 

29.9 FREEHOLD PROPERTIES 

The carrying value of the properties, if they were carried at cost less accumulated depreciation is as follows: 


Rs. ’000 

Land 

Building 

Accumulated depreciation on building 


29.10 EQUIPMENTS 

29.10 (a) Bank 

Cost 















Net book value as at 31 December 2010 


Computer 

equipment 

Rs. ’000 

3,552,665 

270,895 

(77,306) 

(976) 

(49,208) 

(1,035) 

3,695,035 

2,713,075 

380,264 

(77,151) 

(903) 

(48,472) 

2,966,813 

728,222 

839,590 

43,221 

702,359 

(361,167) 

384,413 

Furniture 

& fittings 

Rs. ’000 

1,521,864 

251,998 

(21,288) 

(30) 

(10,132) 

(279) 

1,742,133 

884,640 

144,225 

(25,746) 

36 

(9,392) 

993,763 

748,370 

637,224 

Bank Group 

2009 

Rs. ’000 

43,221 

702,359 

(343,608) 

401,972 

Office 

equipment 

Rs. ’000 

1,345,317 

122,500 

(21,867) 

22 

(16,757) 

(369) 

1,428,846 

828,603 

107,282 

(16,083) 

(101) 

(16,711) 

902,990 

525,856 

516,714 

2010 

Rs. ’000 

43,221 

702,359 

(361,167) 

384,413 

2010 

Total 

Rs. ’000 

6,419,846 

645,393 

(120,461) 

(984) 

(76,097) 

(1,683) 

6,866,014 

4,426,318 

631,771 

(118,980) 

(968) 

(74,575) 

4,863,566 

2,002,448 

– 

2009 

Rs. ’000 

51,403 

1,014,899 

1,023,906 

488,900 

46,471 

703,098 

3,328,677 

2009 

Rs. ’000 

43,371 

713,255 

(349,453) 

407,173 

2009 

Total 

Rs. ’000 

5,572,465 

962,332 

(112,048) 

9,387 

– 

(12,290) 

6,419,846 

3,929,548 

580,088 

(92,682) 

9,364 

– 

4,426,318 

– 

1,993,528



29.10 (b) Group 

Cost 





Transfer from equipments to freehold building 









Transfer from equipment to freehold building 





30. LEASEHOLD LAND 

Cost 






Accumulated amortisation 


Amortisation during the year 




Net book value 

Computer 

equipment 

Rs. ’000 

3,687,646 

286,871 

(77,306) 

(977) 

– 

– 

(45,616) 

3,850,618 

2,820,849 

394,644 

(77,151) 

(902) 

– 

(49,311) 

3,088,129 

762,489 

866,797 

Furniture 

& fittings 

Rs. ’000 

2,136,620 

268,745 

(21,323) 

(30) 

(386,190) 

20,285 

(3,983) 

2,014,124 

1,446,394 

159,408 

(25,781) 

36 

(380,955) 

(9,388) 

1,189,714 

824,410 

690,226 

2010 

Rs. ’000 

73,658 

16,521 

– 

– 

90,179 

10,368 

2,296 

– 

– 

12,664 

77,515 

Bank 

Office 

equipment 

Rs. ’000 

1,379,978 

127,451 

(21,873) 

23 

– 

– 

(17,126) 

1,468,453 

851,565 

111,123 

(16,087) 

(101) 

– 

(16,645) 

929,855 

538,598 

528,413 

2009 

Rs. ’000 

10,159 

– 

– 

63,499 

73,658 

1,720 

1,095 

– 

7,553 

10,368 

63,290 

2010 

Total 

Rs. ’000 

7,204,244 

683,067 

(120,502) 

(984) 

(386,190) 

20,285 

(66,725) 

7,333,195 

5,118,808 

665,175 

(119,019) 

(967) 

(380,955) 

(75,344) 

5,207,698 

2,125,497 

– 

2010 

Rs. ’000 

139,891 

16,521 

– 

– 

156,412 

32,781 

3,653 

– 

– 

36,434 

119,978 

Leasehold land represents the leasehold interest in the lands held for own use. The value of buildings situated in the leasehold land is 

shown separately under property, plant & equipment. The interest on leasehold land is stated at cost less accumulated amortisation. 

2009 

Total 

Rs. ’000 

6,415,017 

989,808 

(115,460) 

9,387 

– 

– 

(94,508) 

7,204,244 

4,715,832 

621,940 

(96,225) 

9,364 

– 

(132,103) 

5,118,808 

– 

2,085,436 

Group 

2009 

Rs. ’000 

65,541 

– 

– 

74,350 

139,891 

11,924 

2,452 

– 

18,405 

32,781 

107,110


31. INTANGIBLE ASSETS 

Cost 






Accumulated amortisation 


Amortisation during the year 



Balance at as 31 December 

Net book value 

2010 

Rs. ’000 

1,411,831 

107,887 

(1,104) 

– 

1,518,614 

1,301,019 

54,873 

(1,104) 

– 

1,354,788 

163,826 

Bank 

2009 

Rs. ’000 

1,348,110 

55,548 

– 

8,173 

1,411,831 

1,115,546 

185,473 

– 

– 

1,301,019 

110,812 

2010 

Rs. ’000 

1,450,670 

109,473 

(1,104) 

1,668 

1,560,707 

1,331,465 

59,076 

(1,104) 

866 

1,390,303 

170,404 

Intangible assets represent the value of computer application software systems and subsequent modifications including costs directly 

attributable in customising for its intended use, and are carried at cost less accumulated amortisation and any impairment losses. 


Rs. ’000 

32. DEPOSITS 

Local currency deposits 

Current account deposits 

Savings deposits 

Time deposits 

Certificates of deposits 

Other deposits 

Foreign currency deposits 

Current account deposits 

Savings deposits 

Time deposits 

Other deposits 

32. (a) CUSTOMER-WISE ANALYSIS OF DEPOSITS 

Deposits from banks 

Deposits from finance companies 

Deposits from other customers 

Note: 

The maturity analysis of deposits is given in Note 46. 

65,438,920 

135,234,980 

155,226,772 

28,539 

1,886,224 

357,815,435 

24,086,714 

54,866,267 

86,281,233 

1,183,048 

166,417,262 

524,232,697 

1,065,756 

2,538,817 

520,628,124 

524,232,697 

Bank Group 

2009 

Rs. ’000 

48,612,023 

110,371,042 

120,893,683 

29,499 

968,732 

280,874,979 

6,416,004 

51,816,724 

68,798,888 

700,847 

127,732,463 

408,607,442 

886,081 

2,220,754 

405,500,607 

408,607,442 

2010 

Rs. ’000 

65,270,554 

135,234,894 

157,867,930 

28,539 

1,886,367 

360,288,284 

25,200,786 

55,141,632 

87,504,950 

1,183,048 

169,030,416 

529,318,700 

1,304,709 

2,538,817 

525,475,174 

529,318,700 

Group 

2009 

Rs. ’000 

1,376,535 

56,707 

– 

17,428 

1,450,670 

1,134,694 

189,860 

– 

6,911 

1,331,465 

119,205 

2009 

Rs. ’000 

48,495,108 

110,371,042 

123,862,640 

29,499 

968,831 

283,727,120 

6,416,004 

51,816,724 

68,798,888 

700,846 

127,732,462 

411,459,582 

886,081 

2,220,754 

408,352,747 

411,459,582


33. BORROWED FUNDS 

Call money borrowings 

Term borrowings from banks abroad 

Term borrowings from banks & other institutions in Sri Lanka 

Refinance borrowings 

33. (a) MATURITY OF BORROWINGS 




2010 

Rs. ’000 

– 

43,743,353 

2,787,625 

5,914,175 

52,445,153 

41,852,436 

10,189,076 

403,641 

52,445,153 

34. SECURITIES SOLD UNDER RE-PURCHASE AGREEMENTS 

Securities sold under re-purchase agreements 53,522,487 

53,522,487 

Bank 

2009 

Rs. ’000 

11,984,026 

2,952,643 

13,269,914 

4,891,794 

33,098,377 

28,738,695 

1,924,890 

2,434,792 

33,098,377 

34,203,701 

34,203,701 

2010 

Rs. ’000 

947,581 

43,743,914 

6,826,345 

5,914,175 

57,432,015 

45,880,019 

11,148,355 

403,641 

57,432,015 

52,968,787 

52,968,787 

The securities sold under repurchase agreements are debt securities issued by the Bank for short term funding purposes and 

mature within a period of less than twelve months. The interest rate for such securities varied from 6.0% to 11.0% during 

the year. (2009 - 6.0% to 20.0%). 

35. INSURANCE PROVISION 

35.1 INSURANCE PROVISION - LIFE 

The insurance provision - life balance represents the life fund of MBSL Insurance Company Limited which carries out life and non life 

insurance business. 

This balance indicates the liability on account of policyholders which has been actuarially valued and claims/benefits due to life 

policyholders, which remain unclaimed to the Balance Sheet date. 


Group 

2010 

Rs. ’000 

2009 

Rs. ’000 


Unclaimed benefits 

Total 

66,365 

572 

66,937 

41,336 

– 

41,336 

Long term insurance contract liabilities included in the Life Insurance Fund, result primarily from traditional non participating life 

insurance products. Short duration contract liabilities are primarily accident and health insurance products. 

The insurance provision has been established based upon the following: 

(a) Interest rates that vary by product and as required by regulations issued by the Insurance Board of Sri Lanka; 

(b) Mortality rates based on published mortality tables adjusted for actual experience as required by regulations issued by the 

Insurance Board of Sri Lanka; and 

(c) Surrender rates based upon actual experience by geographic area and modified to allow for variations in policy form. 

The valuation of the insurance provision - life insurance business as at 31 December 2010 was made by Mr. R Kahakachchi of Actuarial 

& Management Consultants (Private) Limited for and on behalf of MBSL Insurance Company Limited. In accordance with the consultant 

actuary’s report, the reserve for the year amounts to of Rs. 66,364,916/- (2009 - Rs. 41,336,000/-) in the opinion of consultant actuary 

the reserve is adequate to cover the liabilities pertaining to the life insurance businesses. 

Group 

2009 

Rs. ’000 

12,070,026 

2,952,643 

15,852,660 

4,891,794 

35,767,123 

31,227,321 

2,105,009 

2,434,793 

35,767,123 

32,968,041 

32,968,041


Further the actuary has estimated that the solvency margin required under the regulation of Insurance 

Industry Act No. 43 of 2000 as Rs. 3,200,000/- (2009 - Rs. 2,032,000/-). This solvency margin is 

maintained in the long term insurance fund. 

35.1 (a) Movement in Insurance Provision Fund 


Increase in life fund 


2010 

Rs. ’000 

41,336 

25,601 

66,937 

35.2 INSURANCE PROVISION - GENERAL INSURANCE 

The general insurance provision represents non life insurance carried out by MBSL Insurance 

Company Limited. 

The reserve for net unearned premium indicates the amount of premium (net of reinsurance) which is 

attributable to policies written as at 31 December 2010, but covering period after 31 December 2010. 

The reserve for net deferred acquisition cost refers to the commission adjustment (net of reinsurance) 

linked to the above reserve. 

The reserve for gross outstanding claims refers to amount of claims which remain unclaimed 

as at 31 December 2010. 

This reserve includes a reserve for claims incurred but not reported (IBNR). 

Reserve for net unearned premiums [Note 35.2 (a)] 

Reserve for net deferred acquisition cost [Note 35.2 (b)] 

Reserve for gross outstanding claims [Note 35.2 (c )] 


35.2 (a) Movement in the reserve for net unearned premiums 


Increase/(decrease) during the year 


35.2 (b) Movement in the reserve for net deferred 

acquisition cost 




2010 

Rs. ’000 

188,504 

(11,717) 

75,987 

252,774 

157,059 

31,445 

188,504 

(11,080) 

(637) 

(11,717) 

2009 

Rs. ’000 

28,842 

12,494 

41,336 

2009 

Rs. ’000 

157,059 

(11,080) 

35,590 

181,569 

82,906 

74,153 

157,059 

(1,258) 

(9,822) 

(11,080)


35.2 (c) Movement in the reserve for gross outstanding claims 




IBNR and IBNER claims reserve 




Total gross outstanding claims 

2010 

Rs. ’000 

30,479 

34,464 

64,943 

5,111 

5,933 

11,044 

75,987 

2009 

Rs. ’000 

17,232 

13,247 

30,479 

9,720 

(4,609) 

5,111 

35,590 

Directors are of the opinion that the total of future claims and related expenses will not exceed the unearned premium and premium related to 

unexpired risks. IBNR/IBNER claims reserve is determined based on information currently available. However, it is inherent to the nature of the business 

that the ultimate liability may vary as a result of subsequent developments. 

The incurred but not reported claim reserve and Incurred But Not Enough Reported (IBNER) claim reserve have been actuarially computed by 

Mr. N K Parikh of Messrs K A Pandith, Consultants & Actuaries. The valuation is based on internationally accepted actuarial methods, and is 

performed on an annual basis. 

36. DEFERRED TAX 

As at 31st December 

36 (a) SUMMARY OF NET DEFERRED TAX LIABILITY 


Deferred tax originated/(reversed) during the year 


Temporary 

difference 

Rs’ 000 

1,169,866 

137,525 

1,307,391 

As at 31st December Balance Sheet 

36 (b) RECONCILIATION OF NET DEFERRED TAX 

LIABILITY 

Deferred tax liabilities on: 

Accelerated depreciation for tax purposes: 

Own assets 

Leased assets 

Deferred tax assets on: 

Defined benefit plans 

Unused tax losses 

Bank 

Group 

2010 

2009 2010 

2009 

Tax Temporary 

Tax Temporary 

Tax Temporary 

Tax 

effect difference effect difference effect difference effect 

Rs’ 000 Rs’ 000 Rs’ 000 Rs’ 000 Rs’ 000 Rs’ 000 Rs’ 000 

409,453 

48,134 

457,587 

2010 2009 

Rs’ 000 Rs’ 000 

329,075 

247,384 

576,459 

118,872 

– 

118,872 

328,278 

175,280 

503,558 

94,105 

– 

94,105 

Deferred income tax on income/expense 

Net deferred tax liability 457,587 409,453 

1,447,232 

(277,366) 

1,169,866 

Bank 

Income Statement 

506,531 

(97,078) 

409,453 

2010 2009 

Rs’ 000 Rs’ 000 

(797) 

(72,103) 

(72,900) 

24,766 

– 

24,766 

(48,134) 

6,174 

64,531 

70,705 

26,373 

– 

26,373 

97,078 

1,257,519 

141,117 

1,398,636 

440,132 

49,393 

489,525 

1,616,278 

(358,759) 

1,257,519 

565,697 

(125,565) 

440,132 

Group 

Balance Sheet Income Statement 

2010 2009 2010 2009 

Rs’ 000 Rs’ 000 Rs’ 000 Rs’ 000 

421,582 

397,830 

819,412 

150,171 

179,716 

329,887 

412,070 

355,904 

767,974 

123,567 

204,275 

327,842 

489,525 440,132 

(9,512) 

(41,926) 

(51,438) 

26,604 

(24,557) 

2,047 

(49,391) 

915 

38,878 

39,793 

27,633 

58,339 

85,972 

125,765



Rs. ’000 

37. OTHER LIABILITIES 

Accrued interest payable 

Payable to employees and suppliers 

Cheques sent on clearing 

Lease creditors 

- Within 12 months 

- Later than 12 months 

Provision for gratuity (Note 37.1) 

Other Payable 

37.1 PROVISION FOR GRATUITY 


Provision made during the year 

Payment made during the year 

Adjustment/transfers 


10,630,898 

1,558,308 

769,471 

16,805 

25,857 

346,886 

1,910,167 

15,258,392 

272,620 

80,023 

(5,757) 

– 

346,886 


Rs. ’000 

38. DEBENTURES 

Listed debentures 

Unsecured, subordinated, redeemable debentures of Rs. 100/- each 

(public issue) 

Unlisted debentures 

Unsecured, redeemable debentures of Rs. 100/- each (private placement) 

Unsecured, redeemable debentures of Rs. 100/- each (public issue) 

Unsecured, subordinated redeemable debentures of Rs. 100/- each 

(private placement) 

Secured, redeemable debentures of Rs. 100/- each (private placement) 

Unsecured, subordinated, redeemable debentures of US$ 1,000 each 

(private placement) 

38.1 THE MOVEMENT IN DEBENTURES ISSUED WAS AS FOLLOWS: 

Movement in debentures 


Issued during the year 

Redemptions 

Interest capitalised* 

Inter-company adjustment 

Exchange rate adjustment 


* Interest payable on zero coupon debentures has been capitalised to the value of debentures. 

25,378,813 

– 

1,550,000 

– 

2,410,180 

38,706,348 

Bank 

Bank 

2009 

Rs. ’000 

11,662,658 

2,052,534 

1,000,299 

12,432 

21,387 

272,620 

3,767,210 

18,789,140 

202,392 

70,228 

– 

– 

272,620 

2009 

Rs. ’000 

8,700,000 

– 

2,550,000 

– 

2,476,106 

18,044,613 

2010 

Rs. ’000 

11,037,435 

1,558,308 

769,471 

16,805 

25,857 

484,730 

2,525,143 

16,417,749 

379,910 

112,983 

(8,163) 

– 

484,730 

2010 

Rs. ’000 

25,918,113 

– 

1,550,000 

200,000 

2,410,180 

39,434,565 

Group 

2009 

Rs. ’000 

12,094,495 

2,052,534 

1,000,299 

12,432 

21,387 

379,910 

4,066,534 

19,627,591 

295,152 

88,868 

(4,110) 

– 

379,910 

Group 

2009 

Rs. ’000 

9,367,355 4,318,507 9,356,272 4,313,120 

18,044,613 

21,678,813 

(1,000,000) 

48,848 

– 

(65,926) 

38,706,348 

17,988,604 

– 

– 

41,419 

– 

14,590 

18,044,613 

19,113,386 

22,083,113 

(1,744,160) 

48,848 

(696) 

(65,926) 

39,434,565 

9,330,000 

14,160 

2,550,000 

430,000 

2,476,106 

19,113,386 

19,146,514 

330,000 

(418,750) 

41,419 

(387) 

14,590 

19,113,386



Rs. ’000 

38.2 CUSTOMER-WISE ANALYSIS OF DEBENTURES 

Debentures issued to third parties 

Fixed interest rate 

Unsecured, subordinated, redeemable debentures 

Unsecured, redeemable debentures 

Floating interest rate 



Secured, redeemable debentures 

Debentures issued to related entities of the Bank/Group 






Total debentures issued 

38.3 DEBENTURES - SUMMARY 

Subordinated debentures 

Other debentures 

Total debentures 

1,758,313 

– 

11,558,139 

– 

– 

13,316,452 

11,083 

4,428,813 

20,950,000 

25,389,896 

38,706,348 

13,327,535 

25,378,813 

38,706,348 

Bank 

2009 

Rs. ’000 

641,240 

– 

8,698,003 

– 

– 

9,339,243 

5,370 

– 

8,700,000 

8,705,370 

18,044,613 

9,344,613 

8,700,000 

18,044,613 

2010 

Rs. ’000 

1,758,313 

180,000 

11,558,139 

336,800 

200,000 

14,033,252 

– 

4,451,313 

20,950,000 

25,401,313 

39,434,565 

13,316,452 

26,118,113 

39,434,565 

Group 

2009 

Rs. ’000 

641,223 

– 

8,698,003 

344,160 

430,000 

10,113,386 

– 

– 

9,000,000 

9,000,000 

19,113,386 

9,339,226 

9,774,160 

19,113,386


38.4 TYPE OF DEBENTURES 

A - Sri Lanka rupee debentures 


Unsecured, subordinated, 

redeemable debentures 














[6 months TB rate (Gross) plus 

75 basis points] 



[6 months TB rate (Gross) plus 150 

basis points] 




basis points] 








basis points] 





Unsecured, redeemable 

debentures 

[12 months TB rate (Gross)] 


debentures 



debentures 



debentures 


basis points] 

Note Interest payable 

frequency 

(a) 

(a) 

(b) 

Annually 

At maturity 

Annually 

Annually 

Annually 

Annually 

Semi-annually 

Semi-annually 

At maturity 

Issue date Maturity 

date 

24.11.2008 24.11.2013 

24.11.2008 24.11.2013 

28.06.2010 28.06.2015 

01.07.2010 01.07.2015 

14.07.2010 14.07.2015 

17.09.2010 17.09.2015 

31.07.2010 31.07.2013 

31.08.2010 31.08.2013 

05.05.2010 05.06.2013 

Coupon rate Effective 

annual rate 

2010 

% 

19.00 

– 

11.50 

13.20 

13.20 

11.00 

13.00 

13.00 

15.25 

2009 

% 

19.00 

– 

– 

– 

– 

– 

– 

– 

– 

2010 

% 

19.00 

17.61 

11.50 

13.20 

13.20 

11.00 

13.85 

13.85 

15.25 

2009 

% 

19.00 

17.61 

– 

– 

– 

– 

– 

– 

– 

Amount as at 31 December 

Bank 

2010 2009 

Rs. ’000 Rs. ’000 

345,190 

322,775 

1,074,670 

1,000,000 

2,000,000 

1,428,813 

– 

– 

– 

6,171,448 

345,190 

273,927 

– 

– 

– 

– 

– 

– 

– 

619,117 

Group 

2010 2009 

Rs. ’000 Rs. ’000 

339,107 

322,775 

1,069,670 

1,000,000 

2,000,000 

1,428,813 

80,000 

100,000 

22,500 

6,362,865 

339,803 

273,927 

– 

– 

– 

– 

– 

– 

– 

613,730 

(a)/(c) Semi-annually 24.11.2008 24.11.2013 8.95 10.00 10.46 17.04 3,699,390 3,699,390 3,699,390 3,699,390 

(c) Semi-annually 31.12.2003 31.12.2011 10.43 10.15 10.56 16.69 250,000 250,000 250,000 250,000 

(b)/(c) Semi-annually 28.06.2010 28.06.2015 8.95 – 11.54 – 3,925,330 – 3,925,330 – 

(d) Semi-annually 03.11.2005 03.11.2010 – 11.68 – 20.24 – 1,000,000 – 1,000,000 

(d) Semi-annually 27.10.2006 27.10.2011 8.94 12.11 11.88 20.16 1,000,000 1,000,000 1,000,000 1,000,000 

(d) Annually 15.08.2008 15.08.2013 10.49 14.31 12.87 18.14 300,000 300,000 300,000 300,000 

(d) Annually 17.11.2006 17.11.2011 8.19 11.36 10.98 19.41 1,200,000 1,200,000 1,200,000 1,200,000 

(d) Annually 10.01.2007 10.01.2012 10.39 20.27 10.39 20.40 1,500,000 1,500,000 1,500,000 1,500,000 

(d) Annually 12.03.2007 12.03.2012 10.52 19.66 12.30 20.58 1,000,000 1,000,000 1,000,000 1,000,000 

(d) Annually 03.10.2007 03.10.2012 8.39 12.82 11.73 19.51 1,000,000 1,000,000 1,000,000 1,000,000



debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 

[36 months T Bond rate plus 110 

basis points] 


debentures 


basis points] 

Secured, redeemable 

debentures 


basis points] 


frequency 


date 


annual rate 

2010 

% 

2009 

% 

2010 

% 

2009 

% 


Bank 

2010 2009 

Rs. ’000 Rs. ’000 

Group 

2010 2009 

Rs. ’000 Rs. ’000 

(d) Annually 01.11.2007 01.11.2012 8.69 11.48 11.02 19.99 1,500,000 1,500,000 1,500,000 1,500,000 

(d) Annually 01.11.2007 01.11.2012 8.69 11.48 11.01 19.99 500,000 500,000 500,000 500,000 

(d) Annually 01.04.2008 01.04.2013 11.02 18.80 12.94 19.54 500,000 500,000 500,000 500,000 

(d) Annually 01.04.2008 01.04.2013 11.02 18.80 12.94 19.54 1,500,000 1,500,000 1,500,000 1,500,000 

(d) Annually 03.08.2010 03.08.2015 11.50 – 11.50 – 5,200,000 – 5,200,000 – 

(d) Annually 03.08.2010 03.08.2015 11.50 – 11.50 – 1,750,000 – 1,750,000 – 

(d) Annually 03.08.2010 03.08.2015 11.50 – 11.50 – 5,300,000 – 5,300,000 – 

(c) Semi-annually 05.12.2009 05.12.2011 10.39 12.29 12.53 21.55 – – 330,000 330,000 

(d) Semi-annually 31.03.2007 31.03.2010 – 17.00 – 16.31 – – – 14,160 

Semi-annually 05.10.2007 05.10.2010 – 17.85 – 17.36 – – – 300,000 

(d) Semi-annually 31.03.2010 31.03.2013 11.64 – 12.32 – – – 6,800 – 

(d) Annually 10.01.2008 10.01.2010 – 22.22 – 22.23 – – – 430,000



debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 


debentures 


basis points] 

B - United States dollar debentures 







(6 months LIBOR Plus 300 

basis points) 

Total value of debentures 


frequency 


date 


annual rate 

2010 

% 

2009 

% 

2010 

% 

2009 

% 


Bank 

2010 2009 

Rs. ’000 Rs. ’000 

Group 

2010 2009 

Rs. ’000 Rs. ’000 

(d) Annually 10.01.2010 10.01.2011 11.20 – 11.20 – – – 50,000 – 







30,124,720 14,949,390 30,661,520 16,023,550 

2,410,180 

Notes 

(a) Debentures that are listed in the Colombo Stock Exchange which were issued on 24 November 2008. Some of them have been traded in the Colombo Stock Exchange during the 

year ended 31 December 2010. 

(b) Debentures that are listed in the Colombo Stock Exchange which were issued on 28 June 2010. 

(c) Weighted average 6 months Treasury Bill interest rate before deducting 10% withholding tax at the primary quotations as announced by the Central Bank of 

Sri Lanka, at the preceding week of the interest resetting date. 

(d) Weighted average 12 months Treasury Bill interest rate before deducting 10% withholding tax at the primary quotations as announced by the Central Bank of 

Sri Lanka, at the preceding week of the interest resetting date. 

(e) 6 months London Inter Bank Offered Rate (LIBOR) for US Dollars plus 3% per annum. 

Semi-annually 10.10.2008 10.10.2013 5.50 5.50 5.50 5.50 26,761 27,493 26,761 27,493 

(e) Semi-annually 10.10.2008 10.10.2013 3.46 4.69 3.49 4.74 2,383,419 2,448,613 2,383,419 2,448,613 

2,476,106 2,410,180 2,476,106 

38,706,348 18,044,613 39,434,565 19,113,386



Rs. ’000 

39. STATED CAPITAL 

Authorised 

50,000,000 ordinary shares 

Issued and fully paid 

Balance as at 01 January 5,000,000 ordinary shares 

Balance as at 31 December 5,000,000 ordinary shares 

40. PERMANENT RESERVE FUND 


Transfer during the year 


5,000,000 

5,000,000 

2,650,000 

127,500 

2,777,500 

Bank 

2009 

Rs. ’000 

5,000,000 

5,000,000 

2,585,000 

65,000 

2,650,000 

2010 

Rs. ’000 

5,000,000 

5,000,000 

2,650,000 

127,500 

2,777,500 

Group 

2009 

Rs. ’000 

50,000,000 50,000,000 50,000,000 50,000,000 

The permanent reserve fund is maintained as required by the Bank of Ceylon Ordinance No. 53 of 1938 (Chapter 397), whereby the Bank 

must, out of net profit after taxation but before any dividend is declared, transfer to a reserve, a sum equivalent to not less than 20% of 

such profit until the reserve is equivalent to 50% of the issued and paid up capital and thereafter, an appropriate amount determined at 

2% per annum under the Banking Act No. 30 of 1988 and amendments thereto until the reserve is equal to the paid up capital. 

In order to meet the requirement, an amount of Rs. 127 million was transferred to the reserve during the year (2009 - Rs. 65 million). 

The balance in the permanent reserve fund will be used only for the purposes specified in Section 20 (2) of the Banking Act 

No. 30 of 1988 and amendments thereto. 


Rs. ’000 

41. RESERVES 

Capital reserves 

Revaluation reserve (Note 41.1) 125,299 

125,299 

Revenue reserves 

Free reserve (Note 41.2) 

Net exchange translation adjustment (Note 41.3) 

Primary dealer special risk reserve (Note 41.4) 

Other reserves 

41.1 REVALUATION RESERVE 


Realised surpluses on disposal of property 


169,067 

570,545 

776,683 

– 

1,516,295 

1,641,594 

125,299 

– 

125,299 

Bank 

2009 

Rs. ’000 

125,299 

125,299 

169,067 

606,163 

528,470 

– 

1,303,700 

1,428,999 

126,961 

(1,662) 

125,299 

2010 

Rs. ’000 

178,692 

178,692 

366,644 

565,745 

776,683 

137,793 

1,846,865 

2,025,557 

178,692 

– 

178,692 

5,000,000 

5,000,000 

2,585,000 

65,000 

2,650,000 

Group 

2009 

Rs. ’000 

The revaluation reserve represents the surpluses arising on the revaluation of freehold properties which are still in use for banking 

operations. According to the regulatory directives, Bank can account for the revaluation surplus every seven years. Revaluation reserve is 

generally used for the issue of bonus shares or for capital reduction programme. 

178,692 

178,692 

366,644 

606,163 

528,470 

137,793 

1,639,070 

1,817,762 

180,354 

(1,662) 

178,692



Rs. ’000 

41.2 FREE RESERVE 



Free reserve has been created for unforeseeable risk and future losses. 

41.3 NET EXCHANGE TRANSLATION ADJUSTMENT 


Currency translation difference during the year 

Transfer to Income Statement due to conversion 

of London branch into a Subsidiary during the year 


169,067 

169,067 

606,163 

3,948 

(39,566) 

570,545 

Bank 

2009 

Rs. ’000 

169,067 

169,067 

545,766 

60,397 

– 

606,163 

2010 

Rs. ’000 

366,644 

366,644 

606,163 

(852) 

(39,566) 

565,745 

This represents the exchange difference arising from translating investments made in the capital of foreign branches, and also exchange 

differences arising from translation of the results of overseas branches for this year from the average rate to the exchange rate ruling 

at the year end. If and when the investments in foreign branches are disposed, the exchange gain or loss will be recognised in the 

Income Statement. 


Rs. ’000 

41.4 PRIMARY DEALER SPECIAL RISK RESERVE 


Amount transferred during the year 


528,470 

248,213 

776,683 

Bank 

2009 

Rs. ’000 

340,899 

187,571 

528,470 

2010 

Rs. ’000 

528,470 

248,213 

776,683 

According to a direction issued by the Central Bank of Sri Lanka, primary dealers are required to transfer 25% of their profit after tax 

annually to a special risk reserve in order to strengthen capital base for further development of the Government securities market. 

42. COMMITMENTS AND CONTINGENCIES 

42.1 CONTINGENCIES 

In the normal course of business, the Bank undertakes commitments and incurs contingent liabilities with legal recourse to its 

customers to accommodate the financial and investment needs of clients, to conduct trading activities, and to manage its own 

exposure to risk. These financing instruments generate interest or fees and carries elements of credit risk in excess of those amounts 

recognised as assets and liabilities in the Balance Sheet. However, no material losses are anticipated as a result of these transactions. 

These commitments are quantified below: 


Rs. ’000 

Acceptances and documentary credits 

Bills for collection 

Forward exchange contracts 

Guarantees 

Other commitments 

124,677,407 

3,988,739 

46,722,050 

47,666,313 

110,421 

223,164,930 

Bank 

2009 

Rs. ’000 

174,571,889 

3,114,649 

27,928,577 

40,427,298 

202,235 

246,244,648 

2010 

Rs. ’000 

126,048,237 

4,048,990 

46,722,050 

47,876,977 

245,861 

224,942,115 

42.2 The unutilised value of irrevocable commitments which cannot be withdrawn at the discretion of the Bank, without risk of 

incurring significant penalties or expenses approximates to Rs. 23,305 million as at the Balance Sheet date (2009 - Rs. 15,674 million). 

Group 

2009 

Rs. ’000 

366,644 

366,644 

545,766 

60,397 

– 

606,163 

Group 

2009 

Rs. ’000 

340,899 

187,571 

528,470 

Group 

2009 

Rs. ’000 

174,571,889 

3,114,649 

27,928,577 

40,498,766 

202,235 

246,316,116


43. CONTINGENT LIABILITIES AND COMMITMENTS 

43.1 (a) CAPITAL COMMITMENTS 

Capital expenditure approved by the Directors for which no provision has been made in the Financial Statements, amounts to: 


Rs. ’000 

Approved and contracted for 

Approved and not contracted for 

1,052,586 

286,433 

1,339,019 

Bank 

2009 

Rs. ’000 

920,972 

332,740 

1,253,712 

2010 

Rs. ’000 

1,173,586 

286,433 

1,460,019 

43.1 (b) OPERATING LEASE COMMITMENTS 

Future minimum lease payments under non-cancellable operating leases where the Bank is the lessee are as follows: 


Rs. ’000 




637,889 

842,246 

10,834 

1,490,969 

Bank 

2009 

Rs. ’000 

351,600 

130,597 

32,500 

514,697 

2010 

Rs. ’000 

637,889 

842,246 

10,834 

1,490,969 

43.1 (c) FINANCING LEASE COMMITMENTS 

Future minimum lease payments under non-cancellable financing leases where the Bank is the lessee are as follows: 


Rs. ’000 



16,805 

25,857 

42,662 

Bank 

2009 

Rs. ’000 

13,930 

22,635 

36,565 

2010 

Rs. ’000 

16,805 

25,857 

42,662 

Group 

2009 

Rs. ’000 

920,972 

332,740 

1,253,712 

Group 

2009 

Rs. ’000 

351,600 

130,597 

32,500 

514,697 

Group 

2009 

Rs. ’000 

13,930 

22,635 

36,565 

43.1 (d) LITIGATION 

Usually, money transactions, specially lending and employing persons as a workforce encounter disputes. It is natural that some 

of the said disputes end in judicial process for determination. Bank of Ceylon, being a major player in banking transactions, thus 

in lending and being an employer of a large number of staff, attracts the judicial process - litigation as a mode to sort out the 

issues and disputes. 

Bank of Ceylon, due to its efficient and effective dispute resolution, does not carry a bountiful of litigation in its bag. For its 

enormity of money transaction, which reaches more than 100 trillion a year and for a workforce of over 8,000, the cases by 

and against the Bank are less in number comparatively in the industry. 

Out of these cases, most are in regard to recovery of debts from the defaulting customers, averagely 1,000 cases a year 

involving a sum of Rs. 500 - 750 million in debt. 

The debt recovery cases filed by delinquent customers against the Bank to prevent it from recovering the debts by ’short 

process‘ known as ’parate proceedings‘. These cases are known as ’injunction cases‘ against the Bank and are eventually held in 

favour of the Bank as they are filed as dilatic tactics - just to delay the process. Of course, a few are held against the Bank which 

are financially, just a whisper in the huge economy of the Bank. 

All the outstanding cases, disputes and lawsuits have been perused by us and we are of the opinion that they will not cause any 

material impact on the financial stability of the Bank and therefore no related provisions are made.


44. ASSETS PLEDGED AS SECURITY 

The securities sold under repurchase agreements and debentures are debt securities issued by the Bank and the Group and details of assets 

pledged by the Bank and the Group, to secure those liabilities are given below: 


Rs. ’000 

Securities sold under repurchase agreements 


Trust certificates 

Refinance purposes 

Secured by: 

Treasury bills held by the Bank 

Treasury bonds held by the Bank 

Index linked bonds 

Lease/hire purchase rentals receivable 

53,522,487 

– 

– 

– 

53,522,487 

7,055,313 

51,302,618 

– 

– 

58,357,931 

Bank 

2009 

Rs. ’000 

34,203,701 

– 

– 

– 

34,203,701 

3,510,263 

30,693,438 

4,298,045 

– 

38,501,746 

2010 

Rs. ’000 

52,968,787 

30,772 

237,135 

383,329 

53,620,023 

7,055,313 

51,302,618 

– 

651,236 

59,009,167 

Group 

2009 

Rs. ’000 

32,968,041 

16,782 

339,079 

– 

33,323,902 

3,510,263 

30,693,438 

4,298,045 

355,861 

38,857,607 

45. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE 

No material events have occurred since the Balance Sheet date which would require adjustments to, or disclosure in the Financial Statements. 

46. MATURITIES OF ASSETS AND LIABILITIES 

46.1 BANK 

The analysis of total assets and liabilities of the Bank into relevant maturity groupings based on the remaining period as at 31 December into the 

contractual maturity date is given in the table below: 

Interest earning assets 

Treasury bills and other short term bills 

Securities purchased under re-sale agreement 







GOSL - restructuring bonds 

Up to 3 

months 

Rs. ’000 

22,742,419 

40,840,091 

39,346,316 

– 

3,611,800 

15,307,197 

86,397,669 

767,581 

– 

209,013,073 

3-12 

months 

Rs. ’000 

22,636,594 

– 

3,333,482 

– 

1,115,050 

88,706 

133,130,827 

1,070,798 

– 

161,375,457 

1-3 

years 

Rs. ’000 

– 

– 

– 

28,349,481 

69,839,005 

– 

41,153,096 

1,373,207 

– 

140,714,789 

3-5 

years 

Rs. ’000 

– 

– 

– 

18,953,025 

233,024 

– 

35,893,273 

1,013,741 

– 

56,093,063 

Over 5 

years 

Rs. ’000 

– 

– 

– 

3,994,238 

– 

– 

56,523,051 

2,438 

8,547,000 

69,066,727 

Total 

Rs. ’000 

45,379,013 

40,840,091 

42,679,798 

51,296,744 

74,798,879 

15,395,903 

353,097,916 

4,227,765 

8,547,000 

636,263,109


Non interest earning assets 

Cash and balances with other banks 



Accrued interest and others 


Investments in related companies 





Total assets 

Interest bearing liabilities 

Deposits 

Borrowings 



Non interest bearing liabilities 

Deposits 

Accrued interest payable 

Deferred tax liabilities 

Tax payable 


Shareholders’ funds 


Net liquidity gap - 2010 


Up to 3 

months 

Rs. ’000 

14,103,803 

17,587,263 

3,232,348 

10,238,043 

– 

– 

– 

– 

– 

6,986,759 

52,148,216 

261,161,289 

270,034,109 

15,046,545 

41,846,407 

– 

326,927,061 

89,525,634 

12,189,206 

– 

– 

2,683,111 

– 

104,397,951 

431,325,012 

(170,163,723) 

(136,019,523) 

3-12 

months 

Rs. ’000 

– 

7,629,341 

– 

– 

– 

– 

– 

– 

– 

397,172 

8,026,513 

169,401,970 

150,814,505 

26,805,891 

11,676,080 

2,450,000 

191,746,476 

– 

– 

160,156 

2,199,758 

10,420 

– 

2,370,334 

194,116,810 

(24,714,840) 

(21,492,806) 

1-3 

years 

Rs. ’000 

– 

474,967 

– 

– 

– 

– 

– 

– 

– 

– 

474,967 

141,189,756 

9,710,389 

3,521,207 

– 

14,577,535 

27,809,131 

– 

– 

208,202 

– 

28,769 

– 

236,971 

28,046,102 

113,143,654 

87,298,502 

3-5 

years 

Rs. ’000 

– 

171,972 

– 

– 

– 

– 

– 

– 

– 

– 

171,972 

56,265,035 

3,515,853 

6,667,869 

– 

21,678,813 

31,862,535 

– 

– 

89,229 

– 

– 

– 

89,229 

31,951,764 

24,313,271 

26,216,211 

Over 5 

years 

Rs. ’000 

– 

30,923 

– 

– 

5,844,617 

6,123,752 

5,544,589 

77,515 

163,826 

84,294 

17,869,516 

86,936,243 

632,207 

403,641 

– 

– 

1,035,848 

– 

– 

– 

– 

346,886 

28,131,871 

28,478,757 

29,514,605 

57,421,638 

43,997,616 

Total 

Rs. ’000 

14,103,803 

25,894,466 

3,232,348 

10,238,043 

5,844,617 

6,123,752 

5,544,589 

77,515 

163,826 

7,468,225 

78,691,184 

714,954,293 

434,707,063 

52,445,153 

53,522,487 

38,706,348 

579,381,051 

89,525,634 

12,189,206 

457,587 

2,199,758 

3,069,186 

28,131,871 

135,573,242 

714,954,293 

– 

–


46. MATURITIES OF ASSETS AND LIABILITIES (CONTD.) 

46.2 GROUP 

The analysis of total assets and liabilities of the Group into relevant maturity groupings based on the remaining period as at 31 December into the 

contractual maturity date is given in the table below: 

Interest earning assets 

Treasury bills and other short-term bills 








GOSL - restructuring bonds 

Non interest earning assets 

Cash and balances with other banks 



Accrued interest and others 


Investment properties 

Investment in related companies 





Total assets 

Interest bearing liabilities 

Deposits 

Borrowings 



Non interest bearing liabilities 

Deposits 


Insurance provision - non life 

Accrued interest and expenditure 

Deferred tax liability 

Tax payable 


Shareholders’ funds 




Up to 3 

months 

Rs. ’000 

22,450,692 

40,840,091 

44,439,904 

– 

3,671,800 

15,920,399 

87,012,686 

1,426,198 

– 

215,761,770 

13,754,857 

17,587,263 

3,794,537 

10,578,148 

– 

– 

1,284,563 

– 

– 

– 

6,891,244 

53,890,612 

269,652,382 

270,254,128 

17,121,881 

41,292,707 

50,000 

328,718,716 

90,471,340 

– 

– 

12,590,505 

– 

– 

2,684,352 

– 

105,746,197 

434,464,913 

(164,812,531) 

(134,078,210) 

3-12 

months 

Rs. ’000 

23,898,004 

– 

3,333,482 

– 

1,115,030 

95,129 

133,378,368 

3,020,338 

– 

164,840,351 

– 

7,629,341 

10,906 

42,798 

160,965 

105,745 

– 

– 

– 

– 

668,444 

8,618,199 

173,458,550 

153,101,977 

28,758,138 

11,676,080 

2,805,000 

196,341,195 

– 

– 

– 

– 

160,155 

2,422,527 

564,738 

– 

3,147,420 

199,488,615 

(26,030,065) 

(22,383,849) 

1-3 

years 

Rs. ’000 

– 

– 

– 

28,801,941 

69,839,083 

– 

41,377,498 

3,551,429 

– 

143,569,951 

– 

474,967 

– 

– 

– 

– 

– 

– 

– 

– 

33,957 

508,924 

144,078,875 

11,138,650 

3,871,777 

– 

14,744,852 

29,755,279 

– 

– 

252,774 

– 

208,202 

– 

95,462 

– 

556,438 

30,311,717 

113,767,158 

88,841,066 

3-5 

years 

Rs. ’000 

– 

– 

– 

18,953,025 

243,024 

– 

36,961,933 

3,190,726 

– 

59,348,708 

– 

171,972 

– 

– 

12,739 

281,122 

– 

44,047 

– 

1,360 

23,722 

534,962 

59,883,670 

3,720,398 

7,276,578 

– 

21,834,713 

32,831,689 

– 

– 

– 

– 

89,229 

– 

– 

– 

89,229 

32,920,918 

26,962,752 

28,147,955 

Over 5 

years 

Rs. ’000 

– 

– 

– 

3,994,237 

151,638 

– 

56,534,910 

118,183 

8,547,000 

69,345,968 

– 

30,923 

– 

– 

5,924,088 

– 

– 

7,326,261 

119,978 

169,044 

75,337 

13,645,631 

82,991,599 

632,207 

403,641 

– 

– 

1,035,848 

– 

66,937 

– 

5,238 

31,939 

– 

477,454 

31,261,497 

31,843,065 

32,878,913 

50,112,686 

39,473,038 

Total 

Rs. ’000 

46,348,696 

40,840,091 

47,773,386 

51,749,203 

75,020,575 

16,015,528 

355,265,395 

11,306,874 

8,547,000 

652,866,748 

13,754,857 

25,894,466 

3,805,443 

10,620,946 

6,097,792 

386,867 

1,284,563 

7,370,308 

119,978 

170,404 

7,692,704 

77,198,328 

730,065,076 

438,847,360 

57,432,015 

52,968,787 

39,434,565 

588,682,727 

90,471,340 

66,937 

252,774 

12,595,743 

489,525 

2,422,527 

3,822,006 

31,261,497 

141,382,349 

730,065,076 

– 

–


46. MATURITIES OF ASSETS AND LIABILITIES (CONTD.) 

Notes 

(1) Demand and savings deposits have been categorised as up to 3 months maturity group. However, a major part of these deposits 

represent a core retail deposit base with longer term maturity. 

(2) Bills of exchange, loans and advances and lease rentals receivables are shown net of interest in suspense and provision for bad and 

doubtful debts. 

(3) The matching and controlled mismatching of the maturities and interest rates of assets and liabilities is fundamental to the management 

of the Bank. It is unusual for banks ever to be completely matched since business transacted is often of uncertain terms and of different 

types. An unmatched position potentially enhances profitability, but also increases the risk of losses. 

(4) The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest bearing liabilities as they mature, are 

important factors in assessing the liquidity of the Bank and its exposure to changes in interest rates and exchange rates. 

(5) Liquidity requirements to support calls under guarantees and standby letters of credit are considerably less than the amount of the 

commitment because the Bank does not generally expect the third party to draw funds under the agreement. The total outstanding 

contractual amount of commitments to extend credit does not necessarily represent future cash requirements, since many of these 

commitments will expire or terminate without being funded. 

47. RELATED PARTY DISCLOSURES 

In 2010, the Group entered into transactions with its significant investor, Subsidiaries and Associate companies and post-employment benefit 

plans for the Bank’s employees, Key Management Personnel (KMP), Close Family Members (CFMs) of KMP in which such parties have control, 

joint control, significant influence or for which significant voting power is held by such parties. The transactions that have been carried out 

during the year 2010 include lending activities, acceptance and placements, Off-Balance Sheet transactions and provision of other banking 

and financial services. The interests, commissions and other fees on their transactions are determined on an arm’s length basis as per 

Sri Lanka Accounting Standard No. 30 (Revised 2005) on ‘Related Party Disclosures’. 

47.1 PARENT AND THE ULTIMATE CONTROLLING PARTY 

The Bank does not have an identifiable parent of its own. 

47.2 TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL (KMP) 

According to Sri Lanka Accounting Standard No. 30 (Revised 2005) on ‘Related Party Disclosures’, the Key Management Personnel includes 

those who are having authority and responsibility for planning, directing and controlling the activities of the Bank and its Subsidiaries and 

Associates. The Board of Directors, members of the Corporate Management of the Bank, Executive Management and other key employees 

who are holding directorships in Subsidiaries and Associate companies and their Close Family Members (CFMs) have been classified as Key 

Management Personnel of the Bank. 

Close Family Members are those family members who may be expected to influence, or be influenced by, that individual in their dealings with 

the entity.



47.2.1 Compensation to Key Management Personnel 

Short-term employment benefits 

Post-employment benefits 

Post-employment benefits paid to past Directors 

Total 

Rs. ’000 

203,824 

62,539 

– 

266,363 

Bank 

2009 

(Restated) 

Rs. ’000 

154,636 

51,618 

– 

206,254 

2010 

Rs. ’000 

206,657 

62,539 

– 

269,196 

47.2.2 Transactions, arrangements and agreements involving Key Management Personnel (KMP), their Close Family Members (CFMs) 

and entities that are controlled, significantly influenced by the KMP or their CFMs. 


47.2.2 (a) Income Statement 

Interest earned 

Interest paid 

Payments made as shown in Note 47.2.1 

Rs. ’000 

12,969 

4,219 

266,363 


47.2.2 (b) Balance Sheet 

Assets 


Credit cards 

Liabilities 

Deposits 


Rs. ’000 

258,974 

5,341 

264,315 

123,068 

40,650 

163,718 

47.2.2 (c) Off-Balance Sheet items 


Undrawn facilities 164,237 

164,237 

Net accommodation 

Net accommodation as a % of the Bank’s regulatory capital 

387,902 

1.1% 

Bank 

Bank 

2009 

(Restated) 

Rs. ’000 

17,339 

5,266 

206,254 

2009 

(Restated) 

Rs. ’000 

202,973 

3,851 

206,824 

72,855 

41,030 

113,885 

139,527 

139,527 

305,321 

1.0% 

2010 

Rs. ’000 

12,969 

4,219 

269,196 

2010 

Rs. ’000 

258,974 

5,341 

264,315 

123,068 

40,650 

163,718 

164,237 

164,237 

Group 

2009 

(Restated) 

Rs. ’000 

156,472 

51,618 

– 

208,090 

Group 

2009 

(Restated) 

Rs. ’000 

Group 

17,339 

5,266 

208,090 

2009 

(Restated) 

Rs. ’000 

202,973 

3,851 

206,824 

72,855 

41,030 

113,885 

139,527 

139,527


47.3 TRANSACTIONS WITH SUBSIDIARIES AND ASSOCIATE COMPANIES 

47.3.1 Transactions with Subsidiaries and Associate Companies of the Bank 

The Property Development PLC is a Subsidiary of the Bank which owns, maintains and manages the Bank of Ceylon, Head Office building at 

No. 4, Bank of Ceylon Mawatha, Colombo 01. 

The BoC Property Development & Management (Private) Limited, a fully-owned Subsidiary of the Bank, maintains and manages two 

buildings in Colombo 03 and Kandy, where a branch of the Bank and also a principal place of business of another Subsidiary are located. 

Merchant Bank of Sri Lanka PLC, a Subsidiary of the Bank provides certain management services. 

The Ceybank Holiday Homes (Private) Limited, an indirect fully-owned Subsidiary of the Bank, manages the holiday bungalows for the 

welfare of the Bank staff. 

A Subsidiary of the Bank, Property Development PLC has acquired Koladeniya Hydropower (Private) Limited in 2010 which is engaged in 

hydropower generation. 

Bank of Ceylon London branch was converted into a fully-owned Subsidiary of the Bank in 2010 namely, Bank of Ceylon (UK) Limited which 

is engaged in Financial Services including accepting deposits and dealing in investments. 

The aggregate amount of income and expenses arising from their transactions during the year and amount due to and due from the relevant 

related parties, and total contract sum of Off-Balance Sheet transactions at the year end are as follows: 




Interest paid 


Expenses incurred 



Assets 


Placements 


Liabilities 

Deposits 






Letters of credit 

Guarantees 

Undrawn facilities 




Subsidiary Companies 

2010 2009 

Rs. ’000 Rs. ’000 

119,218 

109,791 

22,394 

525,335 


2010 2009 

Rs. ’000 Rs. ’000 

395,167 

14,327,518 

256,447 

14,979,132 

4,027,486 

553,700 

11,083 

248,225 

4,840,494 

86,815 

53,000 

133,684 

– 

273,499 

894,030 

2.6% 

194,343 

4,366 

9,210 

470,578 

212,745 

– 

448,731 

661,476 

328,140 

1,235,660 

5,370 

133,620 

1,702,790 

60,000 

56,500 

147,985 

– 

264,485 

900,591 

3.1% 

Associate Companies 

2010 2009 

Rs. ’000 Rs. ’000 

122,977 

9,489 

1,871 

– 


2010 2009 

Rs. ’000 Rs. ’000 

2,535,663 

– 

– 

2,535,663 

44,470 

375,200 

– 

– 

419,670 

– 

– 

25,500 

– 

25,500 

1,042,465 

3.1% 

88,926 

2 

1,936 

10,801 

2,750,885 

– 

12,844 

2,763,729 

42,968 

89,200 

– 

9 

132,177 

– 

– 

28,435 

50,000 

78,435 

1,192,572 

4.1%


47.3.2 Transactions with Subsidiaries and Associate Companies of the Group 




Interest paid 


Expenses incurred 



Assets 


Placements 

Other receivables 

Liabilities 

Deposits 







Guarantees 

Undrawn facilities 





2010 2009 

Rs. ’000 Rs. ’000 

119,218 

109,791 

106,362 

593,092 


2010 2009 

Rs. ’000 Rs. ’000 

395,167 

14,327,518 

317,197 

15,039,882 

4,027,486 

553,700 

11,083 

256,088 

4,848,357 

86,815 

53,000 

133,684 

– 

273,499 

954,780 

2.8% 

194,343 

6,903 

171,302 

619,396 

212,745 

– 

465,119 

677,864 

328,140 

1,235,660 

5,370 

231,612 

1,800,782 

60,000 

56,500 

147,985 

– 

264,485 

916,979 

3.1% 


2010 2009 

Rs. ’000 Rs. ’000 

122,977 

9,489 

13,306 

27,646 


2010 2009 

Rs. ’000 Rs. ’000 

2,535,663 

– 

– 

2,535,663 

44,470 

375,200 

– 

52,887 

472,557 

– 

– 

25,500 

– 

25,500 

1,042,465 

3.1% 

91,462 

2 

6,451 

28,589 

2,750,885 

– 

108,714 

2,859,599 

42,968 

89,200 

– 

14,275 

146,443 

– 

– 

28,435 

50,000 

78,435 

1,288,442 

4.4%


47.4 TRANSACTIONS WITH THE SIGNIFICANT INVESTORS HAVING SIGNIFICANT INFLUENCE OVER BANK AND THE 

POST-EMPLOYMENT BENEFIT PLANS FOR BANK’S EMPLOYEES 




Interest paid 

Contributions made 



Assets 


Investment in bonds 

Liabilities 

Deposits 




Bills and acceptance 

Guarantees 



47.4.1 (d) Other Transactions 

No. of Ordinary shares held at the year end 

Dividends for the year (Rs. ’000) 

Significant Investor 

2010 2009 

Rs. ’000 Rs. ’000 

7,212,750 

177,441 

– 

11,514,172 

102,729 

– 

Significant Investor 

2010 2009 

Rs. ’000 Rs. ’000 

52,324,373 

85,297,670 

137,622,043 

24,429,780 

– 

24,429,780 

12,982,848 

5,378,459 

8,560,881 

26,922,188 

159,544,231 

472.4% 

5,000,000 

3,096,410 

64,557,521 

81,050,009 

145,607,530 

8,900,089 

– 

8,900,089 

53,886,192 

36,862,417 

8,802,506 

99,551,115 

240,158,645 

820.2% 

5,000,000 

1,346,410 

Post-Employment Benefit Plans 

2010 2009 

Rs. ’000 Rs. ’000 

– 

5,087,479 

2,712,272 

– 

6,642,868 

2,853,088 

Post-Employment Benefit Plans 

2010 2009 

Rs. ’000 Rs. ’000 

– 

– 

– 

20,954,183 

28,461,433 

49,415,616 

– 

– 

– 

– 

– 

– 

– 

– 

– 

27,557,867 

9,900,000 

37,457,867 

– 

– 

– 

– 

– 

–


47.5 RELATED PARTY TRANSACTIONS 

The Bank entered into transactions with its related parties in the ordinary course of business activities including deposits, lending and other banking services. 

The interest rates, commission and other fees on these transactions are determined on an arm’s length basis. Details thereon are summarised below: 

Name of related company Name and relationship Nature of transaction Limit 

Rs. ’000 

47.5.1 Subsidiaries 

Property Development PLC Dr. Gamini Wickramasinghe - Chairman 

Mr. P A Lionel - Director 

Mr. B M Amarasekara - Director 

Mr. L N de Silva Wijeyeratne - Director 

Merchant Bank of Sri Lanka PLC Mr. M R Shah - Chairman 

Mr. V Kanagasabapathy - Director 

Ms. W A Nalani - Director 

BoC Management & 

Support Services 


BoC Property Development & 

Management (Private) Limited 

Mr. B A C Fernando - Chairman 

Mr. K Dharmasiri - Director 

Ms. L S L de S Wijeyeratne - Director 

Mr. B A C Fernando - Chairman 

Ms. W A Nalani - Alternate Director 

Ms. S W S Fernando - Director 

Mr. P J Jayasinghe - Director 

Ms. S H Ranawaka - Director 

Current account 

Time deposit 

REPO balance 

Letter of credit 

Letter of guarantee 

Rent paid in advance 

Deposit for fuel 

Other payable 


Overdraft 

REPO balance 


Series of loan 

Money market loan 

Grant on immediate 

Credit on cheque limit 

Intra day overdraft 


Time deposit 




Time deposit 

REPO balance 


Balance/Amount 

outstanding 

as at 31.12.2010 

Rs. ’000 

4,502 

755,400 

454,200 

5,000 86,815 

3,000 

235,179 

907 

38,150 

35,725 

50,000 25,916 

10,000 

1,083 

600,000 

81,647 

100,000 

– 

– 

1,000 

– 

5,000 

– 

BoC Travels (Private) Limited Mr. Chandrasiri de Silva - Chairman Current account 

27,558 

Mr. B A C Fernando - Director 

Ms W A Nalani - Alternate Director 

Ms. Kumudiniy Kulatunga - Director 

Time deposit 


Overdraft 

40,000 

10,000 

9,600 

– 

Ms. Deepa Wanniaratchi - Director Other payable 

794 

Mr. M K Muthukumar - Director 


50,000 

50,000 

Hotels Colombo (1963) Limited Mr. Rohan Jayasinghe - Chairman 

Ms. Nalini Abeywardene - Director 

Mr. Chandrasiri de Silva - Director 


Mr. M K Nandasiri - Director 

Ms. W K I Kularatne - Director 

Mr. M P R Kumara - Director 

Mr. C D K Walisundara - Director 


Time deposit 


2,467 

1,200 

322 

95 

7,182 

253,074 

62,500 

9,462 

2,589 

79,610 

19,566 

Security 

Related shipping document 

Lease receivable backed by Power 

of Attorney 

Book Debts 

Indemnity of Directors, Debentures 

and Rs. 20 million secured by time 

deposits



Rs. ’000 



Ceylease Financial 

Services Limited 



Mr. A B L A de Silva - Chairman 

Mr. Raju Sivaraman - Director 

Mr. H M A B Weerasekara - Director 

Ms. Sriyani Anandagoda - Director 

Mr. Raju Sivaraman - Chairman 

Mr. W A Asoka Rupasinghe - Director 

Ms. K A D Fernando - Director 

Dr. Gamini Wickramasinghe - Chairman 


Mr. K Dharmasiri - Alternate Director 

Mr. C Samarasinghe - Director 

Mr. H M Mudiyanse - Director 

Mr. D M Gunasekera - Director 

Ms. K A D A Pemadasa - Director 

Mr. W G Ariyaratne - Director 

Mr. A Kuruppu - General Manager 


Savings account 

Time deposit 

Overdraft 



Bridging finance 




REPO balance 

Overdraft 



Money Market Loan 




Time deposit 



MBSL Insurance Company Limited Mr. M R Shah - Chairman 


Overdraft 

Koladeniya Hydropower 






Mr. I G C Madadeniya - 

Chief Executive Officer 

Ms. Sandya Jayasinghe - 

Chief Operating Officer 

50,000 

250,000 

50,000 

100,000 

10,000 

4,000 

50,000 

450,000 

100,000 

350,000 

50,000 


outstanding 

as at 31.12.2010 

Rs. ’000 

50,875 

86 

15 

– 

– 

50,000 

– 

– 

– 

27,111 

27,000 

– 

26,689 

– 

210,000 

– 

1,577 

3,711 

78 

22 

700 

7,353 

915 


US$ 138 

(Nostro accounts) 

(Rs. 15,576) 

EURO 17,801 

(Rs. 2,639,955) 

GBP 427 

(Rs. 73,619) 

Placements EURO 40,000 

(Rs. 5,932,068) 

GBP 48,749 

(Rs. 8,395,450) 

Other payable 181,675 

Security 

Lease receivables backed by Power 

of Attorney 

Clean 

Lease receivable/hire purchase 

receivable backed by Power of 

Attorney 

Clean 

Bills of exchange & shipping 

documents



Rs. ’000 

47.5.2 Associates 

Ceybank Asset Management 


Mr. K L Hewage - Chairman 


Mr. P A Lionel - Alternate Director 

Mr. D M Gunasekara - Director 


REPO balance 

Southern Development 

Mr. D K N Piyasoma - Director Current account 

Financial Company Limited 


Lanka Securities (Private) Limited Mr. K Dharmasiri - Director 


REPO balance 

Overdraft 



Transnational Lanka Records 

Solutions (Private) Limited 


47.5.3 Other Entities 

Credit Information Bureau of 



Dr. Gamini Wickramasinghe - Director 

Ms. B C D Wijayakulasuriya - 

Alternate Director 

Mr. K B S Bandara - Director 

Mr. W P R P H Fonseka - Director 

Mr. T Mutugala - Alternate Director 

Mr. C Samarasinghe - Chairman 

Ms. C K Jayaratne - Director 

Mr. M R Shah - Chairman 



Term loan 

Overdraft 




Mr. B A C Fernando - Director Bank has contributed 

towards the capital 


outstanding 

as at 31.12.2010 

Rs. ’000 

44 

38 

19,755 

367,000 

25,000 – 

US$ 24,000 

(Rs. 2,676,120) 

13,486 

8,200 

US$ 2 

(Rs. 174) 

Rs. 1,533 

US$ 22,700 

(Rs. 2,531,163) 

5,000 4,500 

3 

977 

8,461 

Security 

Treasury bills 

Ms. W A Nalani - Director Bank has contributed 


72,000 Company shares 

Lanka Clear (Private) Limited Mr. B A C Fernando - Director Bank has contributed 



Lanka Financial Services 

Bureau Limited 


Mr. B A C Fernando - Director Bank has contributed 



Bank has invested in 

units/mutual funds 

Ceybank Unit Trust Investments Bank has invested in 


1,113,433 

Ceybank Surekum Gilt Edged Fund Bank has invested in 


100,000 

Clean basis and US$ 14.4 million 

secured by Time Deposit placed by 

Shing Kwan Investment (Singapore) 

Private Limited 

Mortgage over commercial property 


Transactions with other entities where the Board of Directors of the Bank hold directorships, are disclosed under Directors’ Interest in Contracts 

on pages 141 to 144 in this Annual Report. 

95,741


48. FINANCIAL REPORTING BY SEGMENT 

Segmental information is presented in respect of Group business distinguishing the component of the Group that is engaged in different business segments 

or operations within a particular economic environment which is subject to risk and returns that are different from those of other segments. 

48.1 PRIMARY SEGMENT INFORMATION - BUSINESS SEGMENTS (GROUP) 

Business segments provide products and services whose risk and returns are different from other segments which represents banking, leasing, treasury & 

investments, property, insurance and other non-banking activities. 

Revenue from external customers: 

Interest 

Exchange 

Lease income 

Commissions 

Other 

Total revenue 

Segment result 

Unallocated expenses 

Profit from operations 

Income from Associates 

Income tax expense 


Profit attributable to equity holders/parent 

Segment assets 

Investment in Associates 

Unallocated assets 

Total assets 

Segment liabilities 

Unallocated liabilities 



Cash flows from investing activities* 


Capital expenditure 

* Excluding capital expenditure. 

2010 

Rs. ‘000 

33,159,051 

(251,547) 

– 

6,278,055 

1,915,729 

41,101,288 

8,631,548 

– 

– 

– 

– 

– 

– 

377,756,035 

– 

– 

377,756,035 

375,591,228 

– 

375,591,228 

(38,963,122) 

– 

11,691,490 

(1,187,231) 

Banking 

2009 

(Restated) 

Rs. ‘000 

34,527,041 

133,794 

– 

4,169,828 

1,799,925 

40,630,588 

3,938,335 

– 

– 

– 

– 

– 

– 

266,873,616 

– 

– 

266,873,616 

265,227,694 

– 

265,227,694 

63,685,347 

– 

(14,338,027) 

(1,440,020) 

2010 

Rs. ‘000 

62,345 

– 

2,086,052 

109,559 

130,829 

2,388,785 

1,268,596 

– 

– 

– 

– 

– 

– 

11,460,688 

– 

– 

11,460,688 

7,875,741 

– 

7,875,741 

(212,237) 

– 

– 

(22,759) 

Leasing 

2009 

(Restated) 

Rs. ‘000 

52,494 

– 

2,335,035 

76,941 

106,092 

2,570,562 

1,273,440 

– 

– 

– 

– 

– 

– 

10,235,883 

– 

– 

10,235,883 

7,360,029 

– 

7,360,029 

(364,099) 

– 

– 

(21,013) 

Treasury & investments 

2010 2009 

(Restated) 

Rs. ‘000 Rs. ‘000 

17,713,343 

670,008 

– 

– 

3,835,916 

22,219,267 

7,738,205 

– 

– 

– 

– 

– 

– 

312,496,190 

– 

– 

312,496,190 

317,433,546 

– 

317,433,546 

47,068,667 

(58,820,977) 

47,339,896 

– 

18,324,885 

1,433,122 

– 

– 

2,193,672 

21,951,679 

5,214,647 

– 

– 

– 

– 

– 

– 

240,543,400 

– 

– 

240,543,400 

246,167,879 

– 

246,167,879 

39,789,797 

(21,477,780) 

(30,165,163) 

–


Property 

2010 

Rs. ‘000 

2009 

(Restated) 

Rs. ‘000 

Insurance 

2010 

Rs. ‘000 

2009 

(Restated) 

Rs. ‘000 

Other non-banking/unallocated 

2010 2009 

(Restated) 

Rs. ‘000 Rs. ‘000 

Total 

2010 

Rs. ‘000 

2009 

(Restated) 

Rs. ‘000 

4,313 

– 

– 

10,711 

606,009 

621,033 

953,450 

– 

– 

– 

– 

– 

– 

1,711,562 

– 

– 

1,711,562 

394,781 

– 

394,781 

59,373 

(59,258) 

– 

(3,806) 

6,308 

– 

– 

10,735 

605,146 

622,189 

880,149 

– 

– 

– 

– 

– 

– 

1,689,642 

– 

– 

1,689,642 

340,752 

– 

340,752 

(47,676) 

(118,740) 

– 

(4,706) 

29,427 

– 

– 

89,055 

8,665 

127,147 

60,656 

– 

– 

– 

– 

– 

– 

226,116 

– 

– 

226,116 

433,235 

– 

433,235 

93,978 

(148,176) 

50,000 

(5,459) 

19,870 

– 

– 

89,187 

3,076 

112,133 

36,350 

– 

– 

– 

– 

– 

– 

187,349 

– 

– 

187,349 

264,884 

– 

264,884 

16,166 

(118,895) 

99,700 

(130) 

7,755 

– 

– 

283 

401,234 

409,272 

107,462 

– 

– 

– 

– 

– 

– 

1,181,262 

– 

– 

1,181,262 

913,606 

– 

913,606 

(4,705,293) 

– 

(38,143) 

(13,021) 

13,413 

– 

– 

7,011 

220,619 

241,043 

19,468 

– 

– 

– 

– 

– 

– 

1,032,704 

– 

– 

1,032,704 

897,004 

– 

897,004 

(2,666,066) 

– 

(30,629) 

(21,637) 

50,976,234 

418,461 

2,086,052 

6,487,663 

6,898,382 

66,866,792 

18,759,917 

(7,897,330) 

10,862,587 

212,898 

(4,162,289) 

(152,886) 

6,760,310 

704,831,853 

1,284,563 

23,948,660 

730,065,076 

702,642,137 

(3,838,558) 

698,803,579 

3,341,366 

(59,028,411) 

59,043,243 

(1,232,276) 

52,944,011 

1,566,916 

2,335,035 

4,353,702 

4,928,530 

66,128,194 

11,362,389 

(6,773,132) 

4,589,257 

130,653 

(1,402,987) 

(17,050) 

3,299,873 

520,562,592 

1,084,065 

25,773,894 

547,420,551 

520,258,242 

(371,832) 

519,886,410 

100,413,469 

(21,715,415) 

(44,434,119) 

(1,487,506)


48. FINANCIAL REPORTING BY SEGMENT (CONTD.) 

48.2 SECONDARY SEGMENT INFORMATION - GEOGRAPHICAL SEGMENTS 

Geographical segments provide products or services within a particular economic environment where risk and returns are different from those of other 

economic environment. 

These segments comprise domestic operations, Off-Shore Banking Divisions and Off-Shore Banking Units (Branches). 

Assets 

Domestic operations 


Off-shore banking units 

Gross Income 




Profit Before Tax 




Profits After Tax 




2010 

Rs. ’000 

487,346,097 

211,371,532 

16,236,664 

714,954,293 

55,441,933 

6,549,119 

1,371,814 

63,362,866 

6,819,905 

2,447,179 

785,485 

10,052,569 

4,343,288 

1,426,691 

595,333 

6,365,312 

Bank 

% 

68.1 

29.6 

2.3 

100.0 

87.5 

10.3 

2.2 

100.0 

67.9 

24.3 

7.8 

100.0 

68.2 

22.4 

9.4 

100.0 

2009 

Rs. ’000 

385,328,332 

128,209,185 

24,703,620 

538,241,137 

54,376,215 

7,683,187 

1,401,964 

63,461,366 

1,144,944 

2,459,186 

603,517 

4,207,647 

1,095,304 

1,585,283 

403,419 

3,084,006 

% 

71.6 

23.8 

4.6 

100.0 

85.7 

12.1 

2.2 

100.0 

27.2 

58.5 

14.3 

100.0 

35.5 

51.4 

13.1 

100.0 

2010 

Rs. ’000 

479,649,757 

211,371,532 

39,043,787 

730,065,076 

58,550,579 

6,549,119 

1,767,094 

66,866,792 

7,857,643 

2,447,179 

770,663 

11,075,485 

4,905,994 

1,426,691 

580,511 

6,913,196 

Group 

% 

65.7 

29.0 

5.3 

100.0 

87.6 

9.8 

2.6 

100.0 

70.9 

22.1 

7.0 

100.0 

71.0 

20.6 

8.4 

100.0 

2009 

Rs. ’000 

394,507,746 

128,209,185 

24,703,620 

547,420,551 

57,043,043 

7,683,187 

1,401,964 

66,128,194 

1,657,207 

2,459,186 

603,517 

4,719,910 

1,328,221 

1,585,283 

403,419 

3,316,923 

% 

72.1 

23.4 

4.5 

100.0 

86.3 

11.6 

2.1 

100.0 

35.1 

52.1 

12.8 

100.0 

40.0 

47.8 

12.2 

100.0

204

205

Total revenue 32,767,904 29,537,920 10.9 

Interest income 28,520,832 23,549,893 21.1 

Interest income on loans and advances 19,948,098 16,926,336 

17.9 

Interest income on other interest earning assets 8,572,734 6,623,557 

29.4 

Less: Interest expenses 17,253,122 15,011,877 

14.9 

Interest expense on deposits 11,884,429 10,897,117 

9.1 

Interest expense on other interest bearing liabilities 5,368,693 4,114,760 

30.5 

Net interest income 11,267,710 8,538,016 

32.0 

Non - interest income 3,929,491 5,632,590 (30.2) 

Foreign exchange income 16,642 

389,249 (95.7) 

Other income 3,912,849 5,243,341 (25.4) 

Net income 15,197,201 14,170,606 

7.2 

Less: Non - interest expenses 8,323,747 8,116,155 

2.6 

Personnel costs 3,940,190 4,064,038 

(3.0) 

Contribution for staff retirement benefits 1,046,768 1,111,799 

(5.8) 

Premises, equipment and establishment expenses 1,441,909 1,345,600 

7.2 

Loss on trading/ investment securities - 

- 

Amortization of intangible assets 30,000 

78,000 (61.5) 

Other operating expenses 1,864,880 1,516,718 

23.0 

Less: Provision for bad and doubtful debts and loans written off (239,839) 

Provisions - general (208,654) 

Provisions - specific 286,396 

Recoveries (-) (317,581) 

Loans written off - 

Less: Provision for decline in value of investments (Net) - 

Operating profit on ordinary activities before taxes 7,113,293 

Less: Value added tax on financial services 1,032,071 

Operating profit on ordinary activities before corporate tax 6,081,222 

Share of profit of Associate Companies - 

Operating profit before corporate tax 6,081,222 

Less: Tax on profits on ordinary activities 2,038,954 

Operating profit for the period 

Attributable to: 

4,042,268 

Equity holders of the parent 4,042,268 

Minority interest - 

4,042,268 

Basic earnings per share (Rs.) 1,616.91 

INCOME STATEMENT 

For the six months ended For the quarter ended 

For the six months ended 

30-Jun-2011 30-Jun-2010 Growth % 30-Jun-2011 30-Jun-2010 Growth % 30-Jun-2011 30-Jun-2010 Growth % 

803,693 

749,062 

410,068 

(355,437) 

- 

- 

5,250,758 

1,660,865 

3,589,893 

- 

3,589,893 

1,394,822 

2,195,071 

2,195,071 

- 

2,195,071 

Bank 

(129.8) 

(127.9) 

(30.2) 

(10.7) 

- 

- 

35.5 

(37.9) 

69.4 

69.4 

46.2 

84.2 

84.2 

84.2 

878.03 84.2 

16,574,577 15,805,944 

14,699,808 12,173,763 

10,406,137 

4,293,671 

8,849,454 

6,062,083 

2,787,371 

5,850,354 

1,729,911 

(129,925) 

1,859,836 

7,580,265 

4,344,583 

2,098,469 

518,298 

725,324 

- 

15,000 

987,492 

(191,652) 

(222,333) 

175,539 

(144,858) 

3,427,334 

538,782 

2,888,552 

- 

2,888,552 

923,283 

1,965,269 

1,965,269 

- 

1,965,269 

786.11 

8,844,134 

3,329,629 

7,549,486 

5,474,081 

2,075,405 

4,624,277 

3,414,654 

179,617 

3,235,037 

8,038,931 

4,211,268 

2,159,598 

549,957 

673,327 

- 

31,632 

796,754 

388,467 

420,082 

185,912 

(217,527) 

3,439,196 

1,061,504 

2,377,692 

- 

2,377,692 

937,543 

1,440,149 

- 

1,440,149 

576.06 

4.9 

20.7 

17.7 

29.0 

17.2 

10.7 

34.3 

26.5 

(49.3) 

(172.3) 

(42.5) 

(5.7) 

3.2 

(2.8) 

(5.8) 

7.7 

(52.6) 

23.9 

(149.3) 

(152.9) 

(5.6) 

(33.4) 

- 

- 

(0.3) 

(49.2) 

21.5 

21.5 

(1.5) 

36.5 

- 

36.5 

36.5 

34,398,747 30,929,994 11.2 

29,754,814 

21,058,466 

8,696,348 

17,689,331 

12,031,607 

5,657,724 

12,065,483 

4,314,791 

21,001 

4,293,790 

16,380,274 

8,992,097 

4,344,638 

1,066,117 

1,329,088 

- 

35,642 

2,216,612 

(175,198) 

(202,520) 

356,464 

(329,142) 

- 

34,309 

7,529,066 

1,060,350 

6,468,716 

114,708 

6,583,424 

2,204,372 

4,379,052 

4,310,794 

68,258 

4,379,052 

1,724.32 

24,643,392 

17,879,809 

6,763,583 

15,480,718 

11,090,621 

4,390,097 

9,162,674 

5,928,728 

391,949 

5,536,779 

15,091,402 

8,586,719 

4,352,898 

1,121,274 

1,288,365 

- 

86,657 

1,737,525 

866,885 

771,022 

453,737 

(357,874) 

- 

- 

5,637,798 

1,707,512 

3,930,286 

143,178 

4,073,464 

1,608,854 

2,464,610 

2,410,453 

54,157 

2,464,610 

Grou 

20.7 

17.8 

28.6 

14.3 

8.5 

28.9 

31.7 

(27.2) 

(94.6) 

(22.4) 

8.5 

4.7 

(0.2) 

(4.9) 

3.2 

(58.9) 

27.6 

(120.2) 

(126.3) 

(21.4) 

(8.0) 

- 

(100.0) 

33.5 

(37.9) 

64.6 

(19.9) 

61.6 

37.0 

77.7 

78.8 

26.0 

77.7 

964.18 78.8

As at 

On-balance sheet assets 

BALANCE SHEET 

30-June-2011 

Bank Group 

31-Dec-2010 

(Audited) 

Growth % 30-June-2011 

Rs ' 000 

31-Dec-2010 

(Audited) 

Cash in hand 13,496,847 8,759,580 54.1 13,517,572 8,794,468 53.7 

Balances with Central Banks 25,943,602 25,894,466 0.2 25,943,602 25,894,466 0.2 

Due from banks and other financial institutions 25,303,527 48,024,021 (47.3) 30,281,868 52,733,775 (42.6) 

Investments - trading account 94,955,339 74,148,627 28.1 96,884,352 76,143,865 27.2 

Government securities 91,001,958 70,916,279 28.3 92,375,320 72,338,422 27.7 

Other securities 3,953,381 3,232,348 22.3 4,509,032 3,805,443 18.5 

Investments - held-to-maturity 147,532,953 155,790,065 (5.3) 147,961,729 156,264,935 (5.3) 

Government securities 132,201,455 141,165,424 (6.3) 132,201,455 141,165,424 (6.3) 

Government of Sri Lanka Restucturing Bonds 8,547,000 8,547,000 - 8,547,000 8,547,000 - 

Other securities 6,791,146 6,084,289 11.6 7,224,922 6,564,159 10.1 

Less:Provision for decline in value of investment (6,648) 

(6,648) - (11,648) 

(11,648) - 

Investments in Associates and Subsidiaries 6,277,344 6,123,752 2.5 1,343,777 1,284,563 

Growth % 

Total loans and advances 

Total performing loans and advances 409,528,305 369,870,466 10.7 419,927,332 379,291,312 10.7 

Bills of exchange 16,787,961 15,492,048 8.4 17,221,735 15,997,975 7.6 

Overdrafts 87,343,078 68,866,588 26.8 87,463,353 68,944,535 26.9 

Lease rentals receivable 5,886,065 4,022,996 46.3 13,941,385 11,275,265 23.6 

Other loans 299,511,201 281,488,834 6.4 301,300,859 283,073,537 6.4 

Total non-performing loans and advances 12,595,073 12,638,533 (0.3) 13,830,760 13,701,081 0.9 

Bills of exchange 289,262 284,071 1.8 532,417 423,826 25.6 

Overdrafts 2,328,365 2,450,642 (5.0) 2,328,365 2,450,642 (5.0) 

Lease rentals receivable 396,949 570,673 (30.4) 1,126,125 989,169 13.8 

Other loans 8,671,379 8,518,992 1.8 8,934,735 9,023,289 (1.0) 

Foreclosed properities 909,118 814,155 11.7 909,118 814,155 11.7 

Interest receivable on non performing loans 8,229,443 8,127,464 1.3 8,312,803 8,214,332 1.2 

Total gross loans and advances 430,352,821 390,636,463 10.2 442,070,895 401,206,725 10.2 

Less: Interest in suspense (8,355,255) (8,326,692) 0.3 (8,515,329) (8,499,008) 0.2 

Specific loan loss provisions (7,121,196) (7,191,956) (1.0) (7,535,064) (7,592,100) (0.8) 

General loan loss provisions (2 (2,160,714) 160 714) (2 (2,396,231) 396 231) (9 (9.8) 8) (2 (2,337,691) 337 691) (2 (2,527,820) 527 820) (7 (7.5) 5) 

Net loans and advances 412,715,656 372,721,584 10.7 423,682,811 382,587,797 10.7 

Other assets 21,539,382 17,706,268 21.6 22,347,218 18,313,650 

Intangible assets 355,568 163,826 117.0 366,785 170,404 

Investment properties - 

- 

- 444,428 386,867 

Property, plant & equipment 6,137,227 5,622,104 9.2 8,193,892 7,490,286 

Total on-balance sheet assets 754,257,445 714,954,293 5.5 770,968,034 730,065,076 5.6 

On-balance sheet liabilities 

Total deposits 538,470,761 524,232,697 2.7 544,138,020 529,318,700 2.8 

Demand deposits 84,038,843 89,525,634 (6.1) 85,160,205 90,471,340 (5.9) 

Savings accounts 196,842,129 190,101,247 3.5 197,165,952 190,376,526 3.6 

Time deposits 254,438,545 241,508,005 5.4 258,660,460 245,372,880 5.4 

Margin deposits 2,007,794 1,886,224 6.4 2,007,794 1,886,224 6.4 

Other deposits 1,143,450 1,211,587 (5.6) 1,143,609 1,211,730 (5.6) 

Total borrowings 164,139,250 144,673,988 13.5 169,964,992 149,835,367 13.4 

Borrowings from Central Bank of Sri Lanka 5,748,529 5,914,175 (2.8) 5,748,529 5,914,175 (2.8) 

Borrowings from banks and financial institutions in Sri Lanka 1,764,476 2,787,625 (36.7) 6,715,856 6,826,345 (1.6) 

Borrowings from banks and financial institutions abroad 57,564,172 43,743,353 31.6 58,167,917 44,691,495 30.2 

Securities sold under repurchase agreements 60,370,257 53,522,487 12.8 59,976,157 52,968,787 13.2 

Debentures 38,691,816 38,706,348 (0.0) 39,356,533 39,434,565 (0.2) 

Insurance provision - life - - 

- 17,304 

66,937 

Insurance provision - non life - - 

- 246,765 

252,774 

Deferred taxation 471,015 457,587 2.9 498,507 

489,525 

Current taxation 4,045,104 2,199,758 83.9 4,311,205 2,422,527 

Other liabilities 18,129,290 15,258,392 18.8 19,335,469 16,417,749 

Total on-balance sheet liabilities 725,255,420 686,822,422 5.6 738,512,262 698,803,579 5.7 

Equity capital and reserves 29,002,025 28,131,871 3.1 31,331,835 

Stated capital 5,000,000 5,000,000 - 5,000,000 

Permanent reserve fund 2,777,500 2,777,500 - 2,777,500 

Other reserves 21,224,525 20,354,371 4.3 23,554,335 

30,196,086 

5,000,000 

2,777,500 

22,418,586 

Minority interest 1,123,937 1,065,411 

Total on-balance sheet liabilities and equity capital and reserves 754,257,445 714,954,293 5.5 770,968,034 730,065,076 5.6 

Off-balance sheet items and contra accounts 

Contingencies 291,279,831 223,054,509 30.6 291,313,675 224,621,030 29.7 

Commitments and contra accounts 1,210,353 110,421 996.1 1,413,763 321,085 

4.6 

22.0 

115.2 

14.9 

9.4 

(74.1) 

(2.4) 

1.8 

78.0 

17.8 

3.8 

- 

- 

5.1 

5.5 

340.3

For the six months ended Stated Capital 

Permanent Reserve 

Fund 

Investment Fund 

Reserve 

Revaluation 

Reserve 

Rs '000 

Other Reserves Retained Profits 

Balance as at 01-01-2010 5,000,000 2,650,000 

- 

125,299 1,303,700 15,819,588 

Net profit for the six months 2010 2,195,071 

Dividend for 2010 (2,173,205) 

Balance as at 30-06-2010 5,000,000 2,650,000 

- 

125,299 1,303,700 15,841,454 

Balance as at 01-01-2011 5,000,000 

Net profit for the six months 2011 - 

Transfer to reserves during the period - 

Exchange translation adjustment - 

Dividend for 2011 - 

Balance as at 30-06-2011 5,000,000 

For the six months ended Stated Capital 

STATEMENT OF CHANGES IN EQUITY - BANK 

2,777,500 

- 

- 

- 

- 

2,777,500 

Permanent Reserve 

Fund 

- 

591,873 

591,873 

Investment Fund 

Reserve 

125,299 

- 

- 

- 

- 

125,299 

Revaluation 

Reserve 

1,516,295 

- 

(172,114) 

- 

- 

1,344,181 

18,712,777 

4,042,268 

(591,873) 

- 

(3,000,000) 

19,163,172 

Other Reserves Retained Profits 

Balance as at 01-01-2010 5,000,000 2,650,000 

- 

178,692 1,639,070 17,115,523 

Net profit for the six months 2010 2,410,453 

Exchange translation adjustment 577 

- 

Dividend for 2010 (2,173,205) 

Adjustments 5,226 

Balance as at 30-06-2010 5,000,000 2,650,000 

- 

178,692 1,639,647 17,357,997 

Reserves 

STATEMENT OF CHANGES IN EQUITY - GROUP 

Reserves 

Balance as at 01-01-2011 5,000,000 2,777,500 

- 

178,692 

Net profit for the six months 2011 - 

- 

- 

Transfer to investment fund reserve during the period - 

- 

611,746 

- 

Exchange translation adjustment - 

- 

- 

Dividend for 2011 - 

- 

- 

Adjustments - 

Balance as at 30-06-2011 5,000,000 2,777,500 

611,746 

178,692 

1,846,865 

- 

- 

(175,045) 

- 

- 

1,671,820 

20,393,029 

4,310,794 

(611,746) 

- 

(3,000,000) 

21,092,077 

Total Equity 

24,898,587 

2,195,071 

(2,173,205) 

24,920,453 

28,131,871 

4,042,268 

(172,114) 

- 

(3,000,000) 

29,002,025 

Rs '000 

Minority 

Interest 

950,856 

54,157 

- 

(38,142) 

966,871 

1,065,411 

68,258 

- 

- 

(9,030) 

(702) 

1,123,937 

Total Equity 

27,534,141 

2,464,610 

577 

(2,211,347) 

5,226 

27,793,207 

31,261,497 

4,379,052 

- 

(175,045) 

(3,009,030) 

(702) 

32,455,772


Rs.'000 

Bank Group 

For the period ended 30th June 


2011 2010 2011 2010 

Interest receipts 26,133,121 22,546,125 27,322,770 23,129,891 

Interest payments -14,877,821 -16,471,969 -15,464,671 -17,104,118 

Commissions, fees & receipts from other operating activities 4,064,580 3,542,293 4,452,725 3,910,063 

Premium received from policy holders 0 0 321,910 272,230 

Claims and benefits paid 0 -167,836 -84,328 

Reinsurance premium paid 0 -59,373 -73,042 

Reinsurance receipts in respects of claims 0 51,064 4,605 

Cash paid to and on behalf of employees -4,986,958 -5,175,838 -5,410,755 -5,474,172 

Cash payments to suppliers -3,000,992 -3,560,804 -3,262,862 -3,615,227 

Recovery of loans written off in the previous year 49,948 29,026 61,509 357,874 

Value added tax on financial services paid 

Cash Flows from operating activities before 

-1,907,888 -1,609,484 -1,936,104 -1,656,131 

changes in operating assets and liabilities 5,473,990 -700,651 5,908,377 -332,355 

(Increase) / Decrease in operating assets 

Deposits held for regulatory purposes -49,136 -687,087 -49,136 -687,087 

Funds advanced to customers -39,425,082 -66,637,377 -40,602,227 -67,503,297 

Net increase in credit card receivables -379,099 39,472 -379,099 39,472 

Short term marketable securities -1,125,679 -1,477,906 -1,073,926 -820,680 

Other operating assets -2,169,507 -6,473,388 -2,154,306 -5,875,115 

Increase / (Decrease) in operating liabilities 0 

Deposits from other banks 2,192,636 -294,814 2,335,960 -294,814 

Deposits from customers 12,045,429 44,652,052 12,483,359 23,723,921 

Other operating liabilities 2,235,495 408,867 2,360,595 49,858 

Net cash from/(used in) operating activities before -21,200,953 -31,170,832 -21,170,403 -51,700,097 

income tax 

Income tax paid -462,718 -222,989 -567,700 -327,185 

Net cash from/ (used in) operating activities -21,663,671 -31,393,821 -21,738,103 -52,027,282 

Cash flows from investing activities 

Net increase in treasury bills & other eligible bills -21,681,576 -3,474,103 -21,547,806 -3,483,001 

Proceeds from sale of investment securities 11,380,787 5,083,863 11,426,881 5,458,145 

Dividends received 456,980 406,754 335,458 215,997 

Purchase of investment securities -3,352,256 -612,088 -3,353,614 -612,088 

Net cash effect on investments in subsidiaries & associates -22,602,852 0 

Purchase of property plant & equipment -1,173,791 -869,080 -1,472,396 -634,237 

Purchase of securities purchase under resale agreements 1,569,191 3,687,642 1,484,202 3,560,642 

Proceeds from sale of property plant & equipment 1,316 2,792 1,449 8,393 

Net cash from/(used in) investing activities -12,799,349 -18,377,072 -13,125,826 4,513,851 


Proceeds from securities sold under repurchase agreements 6,847,770 20,616,819 7,007,370 20,602,179 

Proceeds from issue/(redemption) of debentures 0 5,000,000 -63,500 4,995,000 

Net increase/ (decrease) in other borrowings 12,632,023 3,182,357 13,200,286 11,405,165 

Dividends paid to Government of Sri Lanka -3,000,000 -2,173,205 -3,000,000 -2,173,205 

Dividends to Minority shareholders -9,030 -38,142 

Net cash from financing activities 16,479,793 26,625,971 17,135,126 34,790,997 

Net increase/(decrease) in cash and cash equivalents -17,983,227 -23,144,922 -17,728,803 -12,722,434 

Cash and cash equivalents at the beginning of the period 56,783,601 59,375,919 61,528,243 59,404,322 

Cash and cash equivalents at the end of the period 38,800,374 36,230,997 43,799,440 46,681,888 

Analysis cash and cash equivalents 

Cash in hand 13,496,847 10,503,179 13,517,572 10,521,955 

Due from banks and other financial institutions 25,303,527 25,727,818 30,281,868 36,159,933 

Cash and cash equivalents at the end of the period 38,800,374 36,230,997 43,799,440 46,681,888

As at 

30-Jun-2011 

31-Dec-2010 

(Audited) 

30-Jun-2011 

31-Dec-2010 

(Audited) 

Net Assets Value per Share(Rs) 5,800 5,626 6,266 6,039 

Regulatory Capital Adequacy 

Core capital (Tier 1 capital), Rs. Mn 25,275 

25,333 

30,140 

30,172 

Total capital base, Rs. Mn 32,627 

33,776 

39,282 

40,377 

Core capital adequacy ratio, % of risk weighted assets 

(Minimum requirement, 5%) 

9.08% 10.30% 10.05% 11.35% 

Total capital adequacy ratio, % of risk weighted assets 

(Minimum requirement, 10%) 

11.72% 13.73% 13.10% 15.20% 

Assets Quality 

Gross non - performing advances ratio, 2.98% 3.30% 3.19% 3.49% 

(Net of interest in suspense) 

Net non - performing advances ratio, 1.30% 1.42% 1.45% 1.55% 

(Net of interest in suspense and provisions) 

Profitability 

Interest margin 3.07% 3.14% 3.22% 3.29% 

Return on assets (before tax) 1.66% 1.60% 1.75% 1.73% 

Return on equity (after tax) 28.30% 24.01% 27.49% 23.81% 

Investor Information 

Debt equity (%) 153.23 158.61 

Interest cover (times) 2.13 2.10 

Regulatory Liquidity 

Statutory liquid assets, 

- Domestic banking unit (Rs. Mn ) 133,729 

- Off-shore banking unit (US$ Mn) 888.70 

143,232 

1,032.40 

Statutory liquid assets ratio, (minimum requirement, 20%) 

- Domestic banking unit 24.88% 28.65% 

- Off-shore banking unit 52.44% 74.17% 

Memorandum Information 

Number of employees 7,928 

Number of branches 310 

Shareholder 

SELECTED PERFORMANCE INDICATORS 

SHARE INFORMATION 

No of Ordinary 

Shares 

Bank Group 

Holding % 

8,204 

309 

30-Jun-2011 31-Dec-2010 

No of Ordinary 

Shares 

Holding % 

Government of Sri Lanka 5,000,000 100 5,000,000 100

EXPLANATORY NOTES 

There are no changes in the accounting policies and methods of computation since the publication of 

annual accounts for the year 2010. 

2 These Financial Statements are presented in accordance with SLAS 35 - Interim Financial Reporting 

and provide the information as required in terms of Listing Rule 7.4 of the Colombo Stock Exchange. 

3 

No circumstances have arisen and no material events have occurred since the balance sheet date, 

which require disclosure or adjustment to the accounts. 

During the period there were no material changes in the composition of assets, liabilities and contingent 

4 

liabilities and use of funds raised through debentures. 

5 All known expenses have been provided for in these Financial Statements. 

6 

The group financial statements comprise a consolidation of the Bank and its subsidiaries, Property 

Development PLC, Merchant Bank of Sri Lanka PLC, Merchant Credit of Sri Lanka Limited, Ceylease 

Financial Services Limited, Hotels Colombo (1963) Limited, BOC Property Development & 

Management (Private) Limited, BOC Travels (Private) Limited, Ceybank Holiday Homes (Private) 

Limited, BOC Management & Support Services (Private) Limited, MBSL Insurance Company Limited, 

Koladeniya Hydropower (Private) Limited,Bank of Ceylon (UK) Limited and the group’s interest in its 

associate companies, Lanka Securities (Private) Limited, Mireka Capital Land (Private) Limited, 

Southern Development Financial Company Limited, Transnational Lanka Record Solutions (Private) 

Limited, Ceybank Assets Management (Private) Limited and MBSL Savings Bank Limited. 

CERTIFICATION 

 

I certify that the above Financial Statements give true and fair view of the state of affairs of Bank of 

Ceylon and the group as at 30 th June 2011 and its profit for the six months ended 30 th June 2011. 

CERTIFICATION 

 

Asoka Rupasinghe 

Chief Financial Officer 

We, the undersigned, being the Chairman, Director and Acting General Manager of the Bank of Ceylon 

certify jointly that; 

a) the above statements have been prepared in compliance with the format and definitions 

prescribed by the Central Bank of Sri Lanka and Rule 7.4 of Colombo Stock Exchange. 

b) the information contained in these statements have been extracted from the un-audited financial 

statements of the Bank and the group unless indicated as audited. 

 

Gamini Wickramasinghe Raju Sivaraman W A Nalani 

Chairman Director Actg.General Manager 

(Independent Non-executive) (Independent Non-executive) 

……… August 2011 

Colombo

DEBENTURE INFORMATION 

Description 

Interest 

payable 

frequency 

Issue date 

Maturity 

date 

Coupon rate Effective annual rate Interest Rate of 

comparable 

Government 

security 

Amount 

Bank 

30.06.2011 31.12.2010 30.06.2011 31.12.2010 30.06.2011 31.12.2010 

% % % % % Rs' 000 Rs' 000 

A - Sri Lanka rupee debentures 


Unsecured, subordinated, redeemable debentures* Annually 24.11.2008 24.11.2013 19.00 19.00 19.00 19.00 7.75 345,190 345,190 

Unsecured, subordinated, redeemable debentures* At maturity 24.11.2008 24.11.2013 - - 17.61 17.61 7.75 350,391 322,775 

Unsecured, subordinated, redeemable debentures** Annually 28.06.2010 28.06.2015 11.50 11.50 11.50 11.50 8.70 1,074,670 

Unsecured, redeemable, debentures Annually 01.07.2010 01.07.2015 13.20 13.20 13.20 13.20 8.70 1,000,000 



6,199,064 



(6 months TB rate (Gross) plus 75 basis points)**/*** 

Semi annually 28.06.2010 28.06.2015 8.77 8.95 9.04 11.54 8.70 3,925,330 


(6 months TB rate (Gross) plus 75 basis points)*/*** 

Semi annually 24.11.2008 24.11.2013 8.72 8.95 9.03 10.46 7.75 3,699,390 


(6 months TB (Gross) rate plus 150 basis points)*** 

Semi annually 31.12.2003 31.12.2011 8.85 10.43 9.05 10.56 7.40 250,000 


(12 months TB ( Gross ) rate plus 75 basis points)**** 

Semi annually 27.10.2006 27.10.2011 8.77 8.94 8.96 11.88 7.40 1,000,000 


(12 months TB ( Gross ) rate plus 100 basis points)**** 

Annually 15.08.2008 15.08.2013 10.49 10.49 10.49 12.87 7.75 300,000 

Unsecured, redeemable, debentures 

(12 months TB (Gross) rate )**** 

Annually 17.11.2006 17.11.2011 8.02 8.19 8.17 10.98 7.40 1,200,000 



Annually 10.01.2007 10.01.2012 8.39 10.39 8.39 10.39 7.40 1,500,000 



Annually 12.03.2007 12.03.2012 8.14 10.52 8.14 12.30 7.40 1,000,000 


(12 months TB (Gross) rate plus 50 basis points)**** 

Annually 03.10.2007 03.10.2012 8.39 8.39 8.39 11.73 7.40 1,000,000 



Annually 01.11.2007 01.11.2012 8.69 8.69 8.69 11.02 7.40 1,500,000 



Annually 01.11.2007 01.11.2012 8.69 8.69 8.69 11.01 7.40 500,000 



Annually 01.04.2008 01.04.2013 8.61 11.02 9.20 12.94 7.75 500,000 



Annually 01.04.2008 01.04.2013 8.61 11.02 9.20 12.94 7.75 1,500,000 



Annually 03.08.2010 03.08.2015 11.50 11.50 11.50 11.50 8.70 5,200,000 



Annually 03.08.2010 03.08.2015 11.50 11.50 11.50 11.50 8.70 1,750,000 



Annually 03.08.2010 03.08.2015 11.50 11.50 11.50 11.50 8.70 5,300,000 

30,124,720 

B - United State dollar debentures 




Semi annually 10.10.2008 10.10.2013 5.50 5.50 5.58 5.50 4.28 26,293 


(6 months LIBOR Plus 300 basis points)***** 

Semi annually 10.10.2008 10.10.2013 3.45 4.69 3.48 4.74 4.28 2,341,739 

2,368,032 

38,691,816 

Notes 

* Debentures that are listed in the Colombo Stock Exchange were issued on 24 November 2008.Some of these have been traded in the Colombo Stock Exchange during the period ended 30 June 2011 

( Highest Price - Rs.100.10, Lowest Price - Rs.100.00, Last Transaction Price - Rs.100.00 ) 

** Debentures that are listed in the Colombo Stock Exchange were issued on 28 June 2010. 

*** Weighted average 6 months Treasury Bill interest rate before deducting 10% withholding tax at the primary quotations as announced by the Central Bank of Sri Lanka, at the preceding week of the 

interest resetting date. 

**** Weighted average 12 months Treasury Bill interest rate before deducting 10% withholding tax at the primary quotations as announced by the Central Bank of Sri Lanka, 

at the preceding week of the interest resetting date. 

***** 6 months London Inter Bank Offered Rate (LIBOR) for US Dollars plus 3% per annum 

1,074,670 

1,000,000 

2,000,000 

1,428,813 

6,171,448 

3,925,330 

3,699,390 

250,000 

1,000,000 

300,000 

1,200,000 

1,500,000 

1,000,000 

1,000,000 

1,500,000 

500,000 

500,000 

1,500,000 

5,200,000 

1,750,000 

5,300,000 

30,124,720 

26,761 

2,383,419 

2,410,180 

38,706,348

Interest yield as at date of last trade done 

BOC Debenture 2008/2013 , 

5 years, fixed rate (19.0%) 19.00 

17.76 

5 years, floating rate (06 months TB rate (Gross) plus 75 basis points ) Not Traded Not Traded 

5 years, zero coupon Not Traded 13.13 


5 years, fixed rate (11.5%) Not Traded Not Traded 


Yield to maturity of last trade done 


5 years, fixed rate (19.0%) 19.00 

16.36 


5 years, zero coupon Not Traded 15.57 


YIELD OF LAST TRADE DONE 

30-June-2011 

% 

31-Dec-2010 

% 

5 years, fixed rate (11.5%) Not Traded Not Traded 

5 years, floating rate (06 months TB rate (Gross) plus 75 basis points ) Not Traded Not Traded

SEGMENTAL ANALYSIS - GROUP 

Banking Leasing Treasury and Investment Property Insurance Other Non Banking / Unallocated Total 

For the six months ended 30th 

June 

Revenue from external customers: 

2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 

Interest 19,684,832 16,741,700 19,082 15,521 8,828,695 6,830,916 1,771 2,153 17,206 19,968 

1,686 

871 28,553,273 23,611,130 

Exchange (496,554) 119,407 

- 

- 

517,555 272,542 

- 

- 

- 

- 

- 

- 

21,001 391,949 

Lease income - 

- 1,201,541 1,032,262 

- 

- 

- 

- 

- 

- 

- 

- 

1,201,541 1,032,262 

Commissions 3,266,541 2,976,356 29,939 50,919 

- 

- 

- 

- 

78,449 58,603 

12,437 

1,659 3,387,366 3,087,537 

Other 633,382 742,607 28,357 25,011 86,692 1,602,958 321,916 290,860 7,026 

546 158,192 145,133 1,235,565 2,807,116 

Total revenue 23,088,202 20,580,071 1,278,919 1,123,714 9,432,942 8,706,417 323,687 293,013 102,681 79,117 

172,315 147,663 34,398,747 30,929,994 

Segment result 6,110,972 3,756,336 661,366 627,578 2,793,912 2,798,566 187,177 132,389 -15,525 (17,970) 

16,007 39,525 9,753,909 7,336,424 

Unallocated expenses - 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

(3,285,193) (3,406,138) 

Profit from operations - 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

- 

6,468,716 3,930,286 

Share of Profit/(Loss) of Associates 

- 

Income tax expense - 


Profit attributable to equity holers / 

- 

parent - 

Segment assets 441,084,481 

Investment in associates - 

Unallocated assets - 

Total assets 441,084,481 

Segment liabilities 438,226,203 

Unallocated liabilities - 

Total liabilities 438,226,203 

Cash flows from 

operating activities (27,470,013) 


investing activities - 


financing activities 8,577,170 

Capital expenditure (1,458,429) 

- 

- 

- 

351,860,825 

- 

- 

351,860,825 

342,415,183 

- 

342,415,183 

(52,121,472) 

- 

6,808,928 

(616,928) 

- 

- 

- 

- 

14,333,531 

- 

- 

14,333,531 

10,510,871 

- 

10,510,871 

(149,470) 

- 

- 

(13,575) 

- 

- 

- 

- 

9,616,877 

- 

- 

9,616,877 

5,084,222 

- 

5,084,222 

(184,688) 

- 

- 

(17,150) 

- 

- 

- 

- 

278,862,203 

1,343,777 

- 

280,205,980 

284,742,181 

- 

284,742,181 

8,092,737 

(13,125,826) 

11,630,486 

- 

- 

- 

- 

206,340,561 

1,204,425 

- 

207,544,986 

225,637,638 

- 

225,637,638 

8,041,195 

4,513,851 

25,198,416 

- 

- 

- 

- 

2,059,338 

- 

- 

2,059,338 

308,662 

- 

308,662 

(39,101) 

- 

- 

(100) 

- 

- 

- 

- 

2,493,709 

- 

- 

2,493,709 

575,029 

- 

575,029 

(48,642) 

- 

- 

(105) 

- 

- 

- 

- 

645,893 

- 

- 

645,893 

484,391 

- 

484,391 

145,765 

- 

- 

- 

- 

- 

- 

- 

510,333 

- 

- 

510,333 

390,759 

- 

390,759 

119,465 

- 

- 

- 

- 

- 

- 

- 

401,642 

- 

32,237,170 

32,638,812 

191,441 

4,048,513 

4,239,953 

(2,318,022) 

- 

(3,072,530) 

(292) 

- 

- 

- 

- 

237,814 

- 

34,504,650 

34,742,464 

196,181 

4,676,975 

4,873,156 

(7,833,141) 

- 

2,783,653 

(54) 

114,708 

(2,204,372) 

(68,258) 

Rs. '000 

143,178 

(1,608,854) 

(54,157) 

4,310,794 2,410,453 

737,387,087 

1,343,777 

32,237,170 

571,060,119 

1,204,425 

34,504,650 

770,968,034 606,769,194 

734,463,749 

4,048,513 

574,299,012 

4,676,975 

738,512,262 578,975,987 

(21,738,103) 

(13,125,826) 

17,135,126 

(1,472,396) 

(52,027,282) 

4,513,851 

34,790,997 

(634,237)

DIRECTORS’ INTERESTS IN CONTRACTS 

Company Relationship Nature of Transactions Limit 

’000* 


outstanding 

as at 31.12.10 

’000* 

DR. GAMINI WICKRAMASINGHE 

Bank of Ceylon (UK)Chairman 




Property Development 

PLC 



The Lanka Hospital 

Corporation PLC 

Informatics Group of 

Companies** 


(Nostro account) 

Placements 


Chairman Current account 

Time deposit 



Chairman 

Director 


Time deposit 

Repo balance 

Rent paid in advance 

Deposit for fuel 






Term loan 


Director Current account 


Managing 

Director 




Time deposit 

Overdraft 

Term loan 



Procurement - 

transaction value 

Payable (excluding 

taxes) 

– 

5,000 

US$ 24,000 

(Rs. 2,676,120) 

45,600 

17,300 

9,600 

US$ 138 

(Rs. 15,576) 

EURO 17,801 

(Rs. 2,639,955) 

GBP 427 

(Rs. 73,619) 

EURO 40,000 

(Rs. 5,932,068) 

GBP 48,749 

(Rs. 8,395,450) 

181,675 

3,711 

78 

22 

700 

4,502 

755,400 

454,200 

235,179 

907 

38,150 

86,815 

3,000 

1,533 

US$ 2 

(Rs. 174) 

US$ 22,700 

(Rs. 2,531,163) 

68 

US$ 2 

(Rs. 172) 

8 

US$ 3 

(Rs. 327) 

927 

US$ 474 

(Rs. 52,905) 

46,663 

2,883 

4,531 


outstanding 

as at 31.12.09 

’000* 

2,585 

75 

138 

580 

1,965 

112,000 

989,140 

209,328 

907 

110,547 

12,673 

US$ 0.3 

(Rs. 34) 

US$ 24,000 

(Rs. 2,749,320) 

12,809 

68 

US$ 2 

(Rs. 176) 

14 

US$ 16 

Rs. 1,854) 

9,555 

US$ 454 

(Rs. 52,008) 

46,369 

6,343 

2,314 

US$ 1,778 

(Rs. 203,679) 

55,084 46,556 

* Currencies in thousands 

** The Board of Directors of Bank of Ceylon has approved the following: 

(1) In terms of minute No. 1.2.07 of 05.05.2009 appointing Visual Computing Systems (Private) Limited (A company belonging to Informatics Group) to provide maintenance 

support in Tandem server. 

(2) In terms of minute No. 5.2 of 14.08.2009 to procure 12 numbers of Automated Teller Machines from Informatics (Private) Limited. 

Security 

Related shipping document 

Clean basis and time deposits 

placed by Shing Kwan 

Investment (Singapore) Pte. 


Time deposits 

Mortgage over commercial 

property 

Residential property


Company Relationship Nature of Transaction Limit 

’000* 


Outstanding as at 

31.12.10 

’000* 

MR. S R ATTYGALLE 

Sri Lanka Ports Authority Director Savings account 


Board of Investment 

MR. RAJU SIVARAMAN 

Ceylease Financial 

Services Limited 

Arch-Triad Consultants 

(Private) Limited** 

Milco (Private) Limited 




Time deposit 

Time deposit 

Term loan 




Repo balance 

Managing 

Director 

Director 

Director 

Overdraft 







Consultancy services 

value 


Time deposit 

Lease 



Time deposit 


Overdraft 





Repo balance 

Reverse Repo 

balance 

US$ 62,512 

750,000 

50,000 

450,000 

100,000 

350,000 

50,000 

188,166 

US$ 381 

(Rs. 42,557) 

591,113 

24,636 

US$ 23,107 

(Rs. 2,576,560) 

US$ 31,256 

(Rs. 3,485,215) 

255,417 

280,438 

27,111 

27,000 

210,000 



31.12.09 

’000* 


** The Board of Directors of Bank of Ceylon has approved the following: 

(1) In terms of minute No. 4.1 of 14.08.2009 appointing Arch-Triad Consultants (Private) Limited as the interior design consultants for interior/exterior refurbishment of 

Super Grade Branch, Nugegoda. 

(2) In terms of minute No. 9.2.10 of 27.04.2010 appointing Arch-Triad Consultants (Private) Limited as the consultants for project of constructing a new building for 

Bank of Ceylon at Nelliady. 

26,689 

1,577 

980 

6,381 

17,000 

Security 

Negative pledge over the 

assets imported 

Clean 

Clean 

58,880 Lease receivable/ hire purchase 

receivable backed by Power of 

Attorney 

86,000 Clean 

Bills of exchange and shipping 

documents 

615 

17,900 

25,498 

315,431 

1,465 

86 

Machinery 

50,875 

36,964 

15 

15 

250,000 

50,000 

– 

50,000 

100,000 

10,000 

4,000 

50,000 30,000 

– 

– 

10,997 

14,000 

127,000 

Lease receivables backed by 

Power of Attorney



’000* 



31.12.10 

’000* 

MS. NALINI ABEYWARDENE 



MR. CHANDRASIRI 

DE SILVA 



BoC Travels (Private) 


MR. K L HEWAGE 

Ceybank Asset 

Management (Private) 


MR. V KANAGASABAPATHY 

Merchant Bank of 

Sri Lanka PLC 

Hotel Developers 

Lanka PLC 



Time deposit 



Time deposit 



Time deposit 


Overdraft 




Repo balance 

Investment in Units 



Overdraft 



Repo balance 

Grant on immediate 

Credit on cheque 

limit 

Intra day overdraft 

Guarantee 

Director Savings account 



Term loan 

(Granted under 

SRCC & T) 

2,589 

79,610 

19,566 

2,589 

79,610 

19,566 

27,558 

40,000 

10,000 

9.600 

50,000 50,000 

794 

50,000 

600,000 

100,000 

1,000 

5,000 

13,486 

8,200 

1,309,174 

35,725 

1,083 

25,916 

81,647 

10,000 

US$ 3 

(Rs. 349) 

JPY 5 

(Rs. 7) 

1,912 

350,000 78,750 



31.12.09 

’000* 

5,695 

31,085 

110,195 

5,695 

31,085 

110,195 

17,202 

20,000 

Security 

5,000 

Book debts 

50,000 Debentures and time deposits 

39,361 

370 

11,615 

26,250 

35,000 

2,500 

US$ 3 

(Rs. 357) 

JPY 1 

(Rs. 1) 

Lease receivable backed by 

Power of Attorney 

4,531 

113,750 Treasury guarantee



’000* 



31.12.10 

’000* 

De La Rue Lanka 

Currency & Securities 

Print (Private) Limited 

Distance Learning 

Centre Limited 

Lanka Hydraulic 

Institute 





Time deposit 

Overdraft 





Time deposit 



30,000 

GBP 22 

(Rs. 3,754) 

842 

GBP 46 

(Rs. 7,849) 

15,962 

281 

US$ 34 

(Rs. 3,749) 

16,262 

2,586 

8,243 



31.12.09 

’000* 

GBP 217 

(Rs. 39,463) 

7,091 

GBP 170 

(Rs. 30,915) 

13,803 

14,256 

38,631 

Security 

Mortgage over commercial 

property 

Related shipping documents 

Time deposits 

Overdraft 2,000 

Time deposits 

47 

18 

7,690 

3,382 

7,680 

31 

169

Prospectus for the Debenture - Asha Phillip Securities Limited - Sri ...

Create successful ePaper yourself

Delete template?

Save as template?