"We believe that the termination of the MOU will give both institutions the flexibility to pursue their respective business strategies while leaving open a window to revisit this option at a future date,”
"If both boards can agree on conditions which will be a win-win for all."
The two banks embarked on the merging under a regulatory move made by the previous regime to create a bigger entity.
Immediately after the regime change both parties were awaiting the government’s stance on the proposed merger.
State entities collectively own over 30 per cent in each bank.
Former Commercial Bank chairman Dinesh Weerakkody was appointed as the Chairman of a Committee to investigate all consolidations done and pending under the previous regime and make recommendations.
The committee also included four other members , W.A. Wijewardena- former Central banker, Nihal Fonseka- former DFCC CEO, a Treasury official and a Central Bank official.
According to this report, the involvement of the state in private sector banks must be reduced either through the application of the same aggregated shareholder limits as applicable to private shareholders or by placing a cap on aggregate voting rights to promote good governance and stability within the private sector banks.
The report added that the government should create an environment for voluntary consolidation of banks by providing the required legal framework and removing impediments and disincentives.