Rajendra Theagarajah, the managing director of Hatton National Bank (HNB), is keen to ride on the coattails of Sri Lankan banks going global.
More corporates from the island are beginning to explore overseas opportunities by sourcing materials from other countries and outsourcing production around Asia. This is good news for Theagarajah, as growing local corporates can provide more lucrative fee-based business.
“Once these guys go global, the diversity in terms of political and country risk becomes manageable and they become more sought after [by investors],” he says. “So, I think we have a strategy to follow some of these big players.” Although the bank is already the country’s fourth-largest with over SLR237 billion ($2.2 billion) in assets, it clearly has its eye on a bigger prize than the Sri Lankan market.
Theagarajah has his eye on commodity exporters. He says they are getting smarter about branding, marketing and distribution. “This is where we feel our investment banking and corporate finance expertise can come in to convince some of these private family-owned businesses to give up part of their ownership and pursue a public listing,” says Theagarajah.
The alternative, he says, is to encourage them to raise funds through convertibles or private placements so these businesses can harness the potential of their balance sheets rather than relying on traditional bank financing to grow them.
The bank also wants to tap into Sri Lanka’s army of SMEs. The bank is keen to educate small business owners to help develop their businesses. “Traditionally, Sri Lanka has been an asset-backed lending environment, and we are slowly and steadily getting into cash flow lending,” says Theagarajah. The bank has developed more sophisticated risk management tools together with the International Finance Corporation, the private sector investment arm of The World Bank, to keep a check on its SME borrowers.
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