The Central Bank of Sri Lanka issued directions to licensed commercial and specialised banks designating Domestic Systemically Important Banks (D‑SIBs) and assigning them to systemic importance buckets, effective from 17 April 2025. The designations place Bank of Ceylon in bucket 3, Commercial Bank of Ceylon PLC and People’s Bank in bucket 2, and Hatton National Bank PLC and Sampath Bank PLC in bucket 1. A companion set of rules sets the criteria and process the Central Bank will use to assess systemic importance, drawing on Basel Committee on Banking Supervision guidelines and applying to all banks in Sri Lanka, including foreign bank branches. The methodology uses an indicator-driven score across four categories with fixed weightings: size (40%, measured by total exposures used in the Basel III leverage ratio), interconnectedness (20%), substitutability/financial institution infrastructure (20%), and complexity (20%); scores are calculated relative to system totals and expressed in basis points. Data are collected from a sample that includes banks with a Basel III leverage ratio exposure measure above LKR 500 billion, previously designated D‑SIBs where necessary, and any banks added through supervisory judgement; D‑SIBs are then allocated to equally sized buckets with different higher loss absorbency requirements, with scope for supervisory discretion and additional buckets if the highest threshold is exceeded. Separately, an addendum to the corporate governance directions for licensed banks requires directors representing shareholders who acquired voting shares in contravention of Section 12(1C) of the Banking Act or related Central Bank directions or approval conditions to abstain from participation and voting in the appointment of independent directors, with immediate effect.
Central Bank of Sri Lanka 2025-04-17
Central Bank of Sri Lanka designates domestic systemically important banks across three buckets and issues D‑SIB assessment criteria
The Central Bank of Sri Lanka has designated Domestic Systemically Important Banks (D-SIBs) and assigned them to systemic importance buckets, effective 17 April 2025. The methodology, based on Basel Committee guidelines, uses an indicator-driven score across size, interconnectedness, substitutability, and complexity. An addendum to corporate governance directions mandates certain directors abstain from appointing independent directors if voting shares were acquired in violation of regulations.