CB to meet banks on controversial hedging deals

The Central Bank (CB) has summoned three commercial banks including Standard Chartered this morning (Wednesday) for separate meetings to ascertain why the ‘due process’ was not followed in hedging deals with the Ceylon Petroleum Corporation (CPC), CB officials said. 

Standard Chartered Bank (SCB), Citibank and Commercial Bank – who issued a joint statement last week saying the CPC was well aware of the risks – will be asked to explain which CB guidelines were not followed in the transactions. The Sunday Times two weeks back brought to the fore how the oil hedging deals have gone wrong with the CPC now facing a possible payout of $300 million in the next few months. Proper risk management procedures were not followed, CB officials say. The newspaper stories in the past two weeks has triggered a CB investigation and led to a series of high level meetings to ascertain why proper risk management procedures were not followed.