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Advance Action on Recruitment of Consultants
Request for Expressions of Interest (International Recruitment)
Country/Borrower: Democratic Socialist Republic of Sri Lanka
Title of Proposed Project: Loan to Bank of Ceylon
Subproject 2: Developing Project Finance Business Unit
Name and Address of Implementing Agency:
Mr. Saliya Rajakaruna
Chief Financial Officer
Bank of Ceylon
Colombo, Sri Lanka
Email: cfo@boc.lk
Background:
1. The Bank of Ceylon (BOC) and the Asian Development Bank (ADB) are currently preparing a project to support BOC in - improving their outreach to SME clients and
- establishing an infrastructure project finance unit as a new business line to support the Government's Development Program through the provision of funding to commercially viable subprojects.
These terms of reference deal exclusively with the infrastructure project finance component of ADB's project.
2. The project is proposed to include a syndicated loan on a commercial basis and a loan from ADB's ADF Resources to fund technical assistance. BOC will be the borrower and executing agency for both loans.
3. Established in 1939, BOC is now Sri Lanka's largest commercial bank. BOC is fully owned by the Government and the Government and its subsidiaries are its biggest client. Given its well reputed brand name in the market, advanced management systems, its implicit support by the Government, and satisfactory capital adequacy, BOC is the best rated public sector commercial bank and among the most successful commercial banks in Sri Lanka.
4. Sri Lanka's five-year development plan has emphasized the need of developing the country's infrastructure. Large investments are required in energy, transport and logistics, and the urban social infrastructure. The needs surpass the Government's available resources and complementary financing is required to help close the gap. Sri Lanka's capital market is in a nascent stage and currently the enabling environment is being developed to allow infrastructure financing through the equity and debt markets. However, developing the needed access to long-term finance is a long process.
5. Until the mid-1990s, Government-owned development banks have provided some project finance. However, their full privatization and reduced access to long-term resources have triggered a change of their business models towards more commercially attractive shorter term investments.
6. Today infrastructure project finance is done through the banks' traditional corporate lending process where banks take a reactive stance to their clients needs. Currently, BOC is not an exception. It has experience in a number of transactions in the power, port, and tourism sectors initiated though their customers. Transactions happen on an ad hoc basis and are not based on a focused business model. There is currently de facto no institution that leads the market more systematically into infrastructure project finance and provides investors the needed expertise and financial structure products that match their needs. Especially there is a dearth of long-term resources in the market.
7. Consistent with its mandate to support the Government's development policies, BOC recognizes the opportunity to develop infrastructure finance as a profitable line of business in a proactive manner and to become the market leader. BOC management recognizes that it needs to invest in developing the expertise and leadership in a focused way through the creation of a special project finance unit that reports directly to the top management.
8. The proposed technical assistance will recruit the expertise to prepare a comprehensive business and resource plan and lead BOC in the build-up the infrastructure finance unit and a commercially viable portfolio of infrastructure projects.
9. The objective of the project component is to promote commercially viable project financing business at BOC. The component will provide line management for a period of up to four years accountable to establish the project finance unit and the business based on successfully established practice elsewhere.
10. This project will also serve building awareness in the market through BOC's demonstration of building project finance capability and viable business in Sri Lanka. The external support under this component provides the cost for external expertise while BOC will match the cost of staffing the unit and investing in the systems and controls required to carry out the project finance business. The experts will conduct an analysis of the current project finance business of the bank and establish critical success factors for establishing the business line.
Consulting Services:
11. The expert services funded under the component entail - awareness building of BOC management and staff, assistance in establishing benchmarks of international best practice in project finance, market studies to identify core sectors and regions, business and resource plans, and
- subsequent to BOC board and management approval of the units business and resource plan, specific assistance to lead the establishment and operations of the project finance unit and build the project finance portfolio.
The consulting agreement will set out the responsibilities of the consultant and BOC, the resources provided for the consulting services, and the resources provided in terms of staff and financial resources based on a business plan.
Download the detailed Terms of Reference(TOR).
12. The selected firm will be expected to provide the services in Sri Lanka.
13. Expressions of Interest stating the qualification of the firm and staff should be marked: "Bank of Ceylon Subproject 2: Developing Project Finance Unit - Expression of Interest"
Attention: Chief Financial Officer,
Bank of Ceylon,
at cfo@boc.lk and
Peter Marro,
Senior Investment Specialist,
South Asia Department,
Governance Finance and Trade Division,
at pmarro@adb.org
Expressions of interest received until 15 March 2008 will be considered. The firm will be selected and engaged in accordance with ADB's Guidelines on the Use of Consultants.
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