Two top officials of the Nation’s Trust Bank (NTB), CEO/Director Zulfiqar Zavahir and Deputy Chief Executive Iftikar Ahamed quit last week following a Rs.800 million foreign exchange loss reported in the June quarter.

Zavahir has resigned from the bank’s board and retired ahead of schedule from his position of CEO while Ahamed has resigned, the bank announced in a stock exchange filing. NTB’s Chief Treasury Manager has also ceased to function, a report said.

The shake up in the senior management of NTB followed interviews between the bank’s board and the Central Bank which regulates the banking industry, well informed sources said.

``The CB didn’t ask them to quit,’’ a well informed source said. ``They went before that happened.’’

Mr. Saliya Rajakaruna who functioned initially as the Bank of Ceylon’s Chief Financial Officer and thereafter became its Chief Risk Officer will succeed Zavahir as CEO of NTB, the bank said in its stock exchange filing on Friday.

He will assume office on September 15 subject to formal approval from the Central Bank and Mr. Sarath Piyaratne, previously of HSBC who had functioned as an Executive Director of NTB following his retirement from HSBC, will act as CEO until Rajakaruna assumes office.

This appointment too needs Central Bank approval which well informed sources said was only a formality.

NTB lost Rs.800 million on foreign exchange trading but ended the June quarter this year with a Rs.150 million profit on its bottom line thanks to bond trading earnings.

In mid-July, Zavahir said in a statement that: "The aggressive provisioning in the first half, coupled with further tightening of risk management measures, have cleared the decks and placed the bank in a strong position to propel resources for greater growth in the next half."

Senior Central Bank sources said that the NTB management had cooperated in adopting necessary measures following the forex losses.

"We wanted to send out the necessary signals about risky trading where executives pulling off a coup are rewarded with large bonuses," a senior Central Bank source said on condition of anonymity. "The bank takes the risk and if it works senior managers too reap the reward."

According to NTB sources Zavahir was due to retire in September but may have been extended till December when Ahamed was due to succeed him.

Central Bank sources said that NTB was fortunate to have been able to recruit Rajakaruna for its CEO slot as this banker with over 30 years experience in the London Offices of Citibank N.A. is an industry veteran.

Rajakaruna has also been credited with protecting the Bank of Ceylon from oil hedging losses. BOC kept off hedging agreements with the Ceylon Petroleum Corporation.

On August 1, after NTB had reported its foreign exchange losses, Fitch Ratings confirmed the bank’s A(lka) rating with the stable outlook.

"NTB’s rating reflects the group’s modest profitability and capital position in relation to the bank’s relative high risk loan book and its adequate liquidity," Fitch said noting that exceptional bond trading gains had mitigated the foreign exchange loss.