Team studying Nepal Bangladesh Bank, NCC merger

NB Group has initiated a study to merge Nepal Bangladesh (NB) Bank and Nepal Credit and Commerce (NCC) Bank, the two commercial banks that the group promoted. "A taskforce formed under the leadership of our Chairman Prithvi Raj Ligal is studying how the merger can be accomplished and where the bank will stand following the merger," Ratna Raj Bajracharya, chief executive of NCC Bank, said. The taskforce is yet to finalize its report. The group took the initiative for the merger mainly considering present market conditions, the position of both banks in the market and also the incentives promised by the government and the central bank for facilitating mergers.

Both NB Bank and NCC Bank have been slow performers with their financials in the red at different intervals, and experts attribute this to undue interference and anomalies on the part of the promoters. "Instead of competing with each other, it is better that the two banks be merged. It will instantly enhance our capacity, assets base and branch network, enabling us to become more competitive in the market," said Bajracharya. Recently, the group had managed to get final nod from the regulator -- Nepal Rastra Bank -- for the merger of Nepal Sri Lanka Merchant Bank (NSLMB), another financial institution promoted by the group, into NB Bank.

Interestingly, the financial health of all three banks and financial institutions promoted by the group had turned bad at different intervals, and this, according to NRB, was due to irregularities by bank promoters themselves. While NSLMB is still in bad financial shape and is facing difficulty paying back depositors even after the maturity of their accounts, NB Bank was also declared a troubled bank by the central bank, which took over its management in 2007. It was only in mid-January, 2010 that the central bank released its control and handed over the management to a newly elected board of directors.

NCC Bank had also nearly faced intervention by the central bank. However, this was avoided after promoters withdrew from the board and handed over management to Bajracharya, promising not to intervene in bank operations. Since then, the bank´s net worth has turned around from a negative net worth of Rs 510 million to a positive net worth of Rs 1.61 billion. Its non-performing assets have dropped from 31.7 percent to 3.69 percent. Currently, NCC Bank is operating with 17 branches. NB Bank has a similar number of branches.

Source:
myrepublica