BANK OF CEYLON
Investment Banking Builds New Ground at Bank of Ceylon
- A closer look at how Bank of Ceylon is advancing market-based finance, advisory, and wealth services.
With shifting macroeconomic conditions, subdued interest rates, and evolving investor expectations, Sri Lanka’s financial sector is seeing increased demand for market-based solutions. Traditional banking alone no longer meets the financing needs of businesses and individuals looking for more than loans and deposits. This is where investment banking steps in, offering structured funding options, capital market access, and advisory services that go beyond balance sheet lending.
Bank of Ceylon (BOC), one of Sri Lanka’s largest and most experienced financial institutions, has steadily expanded its presence in this space. Its Investment Banking Division has evolved into a key player across a broad range of activities, from debt structuring and equity placement to IPO underwriting, securitization, and wealth management.
To understand how BOC is navigating this transformation and what its investment banking arm offers today, we sat down with Mr G. A. Jayashantha Deputy General Manager of the International, Treasury and Investment division for a detailed conversation. Here’s what he shared.
Q1: What is the main role of the Investment Banking Division at Bank of Ceylon?
A: The Investment Banking Division at Bank of Ceylon (BOC) has grown into a core part of the bank’s non-traditional operations. While BOC has long been recognized for its retail and corporate banking services, its investment banking unit plays a different, more specialized role, offering advisory, structuring, and market-based solutions to a wide range of clients.
The main part of this division is a portfolio of services that includes corporate finance advisory, capital market structuring, bond issuances, equity and debt structuring, and underwriting for IPOs.
The division also manages wealth portfolios for individual and institutional clients. These functions help the bank extend its reach beyond conventional banking by engaging more deeply with capital markets, supporting businesses in raising funds, and offering investors access to structured financial instruments.
One of the areas under development is corporate advisory services. The division plans to expand in this direction by supporting strategic restructuring, private placements, and transaction advisory services. With Sri Lanka’s financial market gradually maturing, the need for such services is growing. The current macroeconomic conditions, marked by relatively low interest rates and industry related pressure on traditional banking, create the ideal setting for BOC to expand its capital market offerings.
Q2: What types of instruments has BOC issued through its investment banking arm?
A: BOC’s investment banking team has structured and issued a variety of instruments, both to support the Bank’s internal capital requirements and to meet the funding needs of clients. These include listed and unlisted debentures, perpetual debt instruments, and other marketable securities designed to meet long-term financing requirements.
BOC was also the first public sector bank in Sri Lanka to issue a listed Basel III-compliant debenture. This issuance set a precedent among state-owned banks and opened up new possibilities for raising regulatory capital through the market.
Q3: Has BOC been active in securitization and risk transfer deals?
BOC has structured securitized instruments using asset pools like lease receivables and loan portfolios to help corporates monetize receivables and diversify funding sources. Through these transactions, businesses gain access to investor funding while the bank manages credit exposure, liquidity, and risk more effectively.
For the Bank, these transactions create value by enabling fee-based income, reducing concentration risk, and maintaining asset rotation in a way that supports sustainable lending growth. Given the structural liquidity challenges in the Sri Lankan market, securitization remains a useful option for financial intermediation.
Q4: What are the key areas of synergy between BOC’s Investment Banking Division and other functions of the Bank?
A: BOC’s Investment Banking Division works closely with other units of the Bank, particularly the Corporate Banking and Treasury units. These synergies allow the Bank to provide integrated financial solutions, combining lending, advisory, and market-based tools.
One example will be loan syndication, where the Bank’s Credit division is involved in and Investment Banking Division can assist large borrowers in raising funds through multi-bank arrangements. This will allow BOC to participate in large credit deals without bearing the entire exposure.
Further, Treasury division manages the structuring of derivative products where Investment banking division can assist, helping clients hedge interest rate and currency risks. These will often be tailored to the specific needs of exporters, importers, and large capital-intensive businesses.
On the private equity side, the division will assist in identifying viable small and medium enterprises (SMEs) that are ready for external investment. By offering valuation, due diligence, and deal structuring support, the Bank will help bridge the gap between investors and high-potential businesses.
Additionally, BOC’s role as one of the five bank Primary Dealers in the government securities market will complement the investment banking function. With its experience and market access, the Bank will be able to support sovereign debt issuance while also offering treasury products to institutional clients.
Q5: How does BOC maintain compliance and governance in investment banking activities?
A: All investment banking activities are conducted within the regulatory frameworks of the Central Bank of Sri Lanka (CBSL) and the Colombo Stock Exchange (CSE). Internally, the Bank has established separate compliance and risk management functions for capital market operations.
Before any transaction is executed, whether it is a bond issue, or a structured product, it is subjected to legal reviews, and risk assessments. Compliance teams monitor adherence to regulatory and reporting requirements, while dedicated officers oversee client onboarding, product suitability, and disclosure protocols.
Transparency and accountability are emphasized in all aspects of the division’s work, particularly in public offerings and investor communications.
Q6: What are some recent milestones or accomplishments in the investment banking space?
A: The past year has seen several important developments. One of the most notable was obtaining in-principle approval from the SEC to operate as a licensed Corporate Finance Advisor. This license allows the division to formally offer advisory services on capital raising, listing preparation, restructuring, and valuation assignments. It marks a key step in expanding the division’s mandate.
Another milestone was the successful issuance of Basel III-compliant, listed Tier II debentures, and an Additional Tier I bonds. These instruments supported the Bank’s capital adequacy under regulatory guidelines while also offering investors access to long-term, high-quality securities backed by a state-owned entity.
Q7: What role does investment banking play in BOC’s long-term strategy?
A: Investment banking allows BOC to reposition itself as a full-service financial institution that supports clients across their entire financial lifecycle. While retail and corporate lending remain core activities, market-based services are essential to support large-scale investment, infrastructure development, and private sector growth.
The division is currently working with the Colombo Stock Exchange to structure a GSS+ Bond, which will allow the Bank to fund environmentally sustainable projects. This reflects growing interest in ESG-aligned finance and opens new channels for BOC to engage with both local and foreign investors. By collaborating with large industry players, the Bank is also receiving proposals for high-volume mandates involving debt and equity raising.
These transactions can only be executed by an institution with the scale, credibility, and structuring capacity that BOC is expected to offer. Going forward, the Bank expects to see continued growth in areas like IPO advisory, structured products, and syndicated finance and M&A advisory.
Q8: What trustee, custodian, and clearing services does BOC currently provide?
A: BOC provides trustee and custodian services for unit trust funds with a portfolio in excess of Rs. 400 billion and acts as a trustee for debenture issues amounting to about Rs. 173 billion. In addition, the Bank offers custodian services and equity settlement services for large funds and clients, with volumes totaling around Rs. 370 billion.
These are off-balance-sheet activities. BOC has also obtained professional clearing membership under the Colombo Stock Exchange’s Central Counterparty System (CSE Clear) and plans to expand these services further to support equity settlements for a wider client base.
Q9: What does BOC offer through its Wealth Management services?
A: The Wealth Management unit under the Investment Banking Division offers a wide range of investment and advisory services designed for individuals and institutions seeking long-term financial planning and asset growth.
Clients are assigned experienced Relationship Managers who provide guidance on investment choices, risk management, and portfolio performance.
Investment options include fixed deposits, Treasury Bills and Bonds, corporate debentures, listed shares, mutual funds, and structured deposits. Each client’s portfolio is tailored to match their risk profile, financial goals, and investment horizon.
These services are particularly popular among professionals, entrepreneurs, and high-net-worth individuals who require a structured approach to managing their wealth. Institutional clients, such as public sector funds, also use these services to manage surplus cash and long-term reserves.
Clients can get started by contacting the Wealth Management desk at 011-2203644/47 to schedule a consultation. Fees vary depending on the services and portfolio size, but all pricing is explained upfront. The goal is to offer long-term, practical solutions without surprises. Looking ahead, the division will expand, rebrand, and relaunch its products as part of an ongoing transformation that is already in progress.
