Therefore, let us continue our cordial relationship with the financial institutions as we may make our influence felt more effectively through the enhancement of usual interactions with financial institutions rather than through exercising all of the Central Bank’s powers conferred under the Monetary Law Act. Members of financial institutions, we solicit your maximum attention to maintaining the stability of your own institution in order to ensure the overall stability in the financial system of the country. Honourable Minister and distinguished guests, our financial sector consolidation programme is a forward looking programme designed to monitor, identify and track the sources of systemic risk over time to ensure financial system stability. This programme will change the financial landscape of the country by transforming the financial institutions to be stronger and more resilient institutions, which can support the expected quantum leap of our economy. At the same time we encourage them to penetrate regional and global markets. In addition, we expect to develop a vibrant offshore financial market in Sri Lanka and a reputed arbitration centre in Colombo on financial sector issues. By 2020, we expect at least 3 domestic banks exceeding Rs. 2 trillion in asset base and at least 5 banks operating in regional markets, setting the stage to take the economy to the next level of development by 2030.
Singapore: Singapore consolidated its banks, leading to bigger and stronger banks whose interests were aligned to the long term interests of the economy. In early 2000, Singapore launched its bank consolidation process, together with the liberalisation of the banking industry. A major move in the local banking sector was the consolidation of the 6 local banking groups into the present 3 main local banking groups, thereby strengthening banks’ capabilities, building efficient management teams and enhancing operational effectiveness. This move strengthened the economic viability of all banks, and provided Singapore with better services and a competitive edge not only in the region but also in the global context. Thailand: In Thailand too, financial sector consolidation was initiated after the Asian financial crisis with the objective of improving the efficiency and transparency while reducing the number of smaller financial institutions. A restructuring package was introduced to consolidate the commercial banks and finance companies that were unable to recover by themselves. Further, competition and cost cutting have also been reasons that promoted consolidation. As the final outcome, the number of participants in Thailand’s banking sector is projected to shrink. Similar financial sector consolidation has been observed in several other Asian countries such as South Korea, Indonesia and the Philippines after the Asian financial crisis. This initiative has helped them to protect themselves from the recent global financial crisis that affected most of the Western world.