Rastriya Banijya Bank & NIDC all set to merge

At a time when private banks and financial institutions (BFIs) are engaged in homework for the proposed merger among them, the government is planning to merge two state-owned financial institutions. Work is on to merge the Rastriya Banijya Bank (RBB) and Nepal Industrial Development Corporation (NIDC) within this fiscal year. The RBB-NIDC merger is on line with the central bank's suggestion that came around three months ago. The plan is an alternative mooted by the government instead of injecting capital in the RBB.

With the government's reluctance to inject fresh capital in the RBB, the merger is now being taken as a measure to turn the bank's capital from negative to positive. Currently, the RBB's net worth is negative by Rs 10 billion. The government has been reluctant to inject capital in the RBB saying that the budget for development purposes cannot be used to rescue a bank. Addressing the RBB's 46th anniversary programme, Finance Minister Surendra Pandey and Nepal Rastra Bank (NRB) Governor Yubaraj Khatiwada on Monday suggested the RBB go for merger.

Despite implementation of the financial sector reform programme for eight years, the RBB has failed to turn into a healthy bank. As per the government plan, RBB's net worth can be turned positive by selling the assets of the NIDC if both institutions are merged. The NIDC has plots of land in Kathmandu, Pokhara, Biratnagar, Bharatpur, Mahendra Nagar, Surkhet and Dhangadi, whose estimated worth is Rs 10 billion. If the RBB-NIDC merger happens, it will be the first instance of government-owned financial institutions getting merged. Unlike the RBB, the NIDC's financial health is gradually improving with its net worth that was negative by Rs 1.22 billion in 2006 turning positive by Rs 900 million by the end of the last fiscal year. "NIDC's status has improved as a result of recovery of loans and sales of shares in another bank," said a senior NIDC official. The NIDC that has paid up capital of Rs 410 million had earned profits of Rs 450 million last fiscal year. The NIDC recently submitted its audit report of the past eight years to the NRB.

With the government having a majority stake in the NIDC, it won't have hiccups in getting the merger decision endorsed by the annual general meeting (AGM) of the NIDC. As per laws, the AGM will have to endorse the merger decision. The government has given priority to mergers through the budget for the current fiscal year. However, RBB's employee unions are not positive about the proposed merger plan. During the 46th anniversary of the RBB, representatives of employees unions had expressed reservations on the merger plan.

The NIDC has also initiated the voluntary retirement scheme (VRS) to pave way for a smooth adjustment of employees after the merger. "The VRS has been designed to give more than the normal benefits to employees retiring," said a source at the NIDC. The NDIC employees, however, have not shown interest in the VRS till now. The deadline to apply for VRS is Jan. 31. There are 49 permanent employees in the NIDC and the VRS is targeted at 33 of them who have served over 15 years at the NIDC. The government will opt for compulsory retirement scheme if the employees don't leave the NIDC under the VRS. "Such a provision can be implemented for those who have crossed 20 years of service in the NIDC," said the source.

The central bank is also planning to give certain incentives for merger while reviewing the monetary policy in February. The budget has already announced changing the existing provision of taxing assets and liabilities as disposal after mergers, making it non-taxable to encourage mergers amongst the BFIs. Of late, more BFIs are in the process of merging. Banks and finance companies promoted by the NB group are in the process of merger. They include Nepal Bangladesh Bank and Nepal Credit and Commerce Bank. Birgunj Finance of Birgunj and Himchuli Finance of Pokhara also recently signed an agreement for merger.

Source:
ekantipur

Announcements

Ordinary Share Allotment: Himalaya Finance

Himalaya Finance Ltd has allotted its ordinary share to 25220 applicants on 15 September 2010 (2067 Bhadra 30) which is based on following model.

4th Quarter Financial Report & Company Analysis (2066/67): Everest Insurance Co. Ltd

Everest Insurance Co. Ltd has published financial reports and company analysis during the fourth quarter of fiscal year 2066/67. 

Press Release: NIDC Capital Markets (NCM)

NIDC Capital Markets has issued press release regarding the ordinary share allotment of Valley Finance Ltd on 15 Sep, 2010 (2067 Bhadra 30). 

Ordinary Share Allotment: Valley Finance

Valley Finance Ltd has allotted its ordinary share to 51407 applicants on 15 September 2010 (2067 Bhadra 30) which is based on following model. More Details 

Treasury Bill Issue: Nepal Rastra Bank (NRB)

Nepal Rastra Bank is issuing 28 days Treasury bill, 91 days Treasury bill, 182 days T-bill and 364 day T-bill on 21 September 2010. The bid quotation are to be submitted by 20 September, 2010 (2067 Ashwin 5). 

30% Bonus Share & 10% Cash Dividend: NCM

NIDC Capital markets Limited (NCM) has decided to provide 30 percent bonus share and 10% cash dividend to its shareholder from the profit of fiscal year 2065/66. The meeting of Board of Directors (BOD) scheduled on 28 December 2009 (2066 Poush 13) has decided the proposition of dividends however needed to be approved from the Central Bank of Nepal and its upcoming Annual General Meeting.

Source: 
Jamb News Service

Door opens for Agricultural Dev. Bank IPO

The Agricultural Development Bank Limited (ADBL) has named its issue manager Ace Development Bank as underwriter of its ordinary share issue. It has opened door for ADBL to get approval from Securities Board of Nepal for issuing shares.

The ADBL is working to issue ordinary shares worth Rs. 960 million which is the largest ever initial public offering (IPO) in the country. "The ADBL board on Nov. 10 decided to award the job of underwriting the ADBL's shares to Ace as its quoted fee was lower than its rival NMB Bank," said a senior ADBL official. Ace had quoted Rs. 775,000 against Rs. 960,000 by NMB, added the official.

The underwriter promises to purchase the shares if the public doesn't buy them in the amount desired by the issuing company. Although the bank had called for quotations from seven merchant bankers including Elite Merchant Banking, Citizen Investment Trust, Vibor Development Bank, NIDC Capital Markets and Development Credit Bank besides Ace and NMB, these two were the only takers for the underwriting contract. SEBON, the regulatory body of the stock market, had delayed giving permission to the ADBL to go for an IPO for its failure to have its shares underwritten as per the SEBON directive. The SEBON had also sought more disclosure about its financial status.

As per the directive, any company going for an IPO should ensure underwriting of half of the total shares to be issued. Only companies that have received a license from the board can underwrite the shares. The ADBL had difficulty finding merchant bankers to underwrite its shares worth a whopping Rs. 480 million with the central bank preventing B and C class financial institutions from underwriting more than 20 and 10 percent respectively of the primary shares. Nepal Rastra Bank (NRB) resolved the problem by issuing a fresh directive on Oct. 30 freeing all classes of financial institutions from this restriction. "We could not have been able to underwrite the shares as per the SEBON directive if NRB had not issued a new directive removing the barrier on underwriting," said Siddhant Raj Pandey, chief executive officer of Ace. "The provision of underwriting 50 percent of the total shares is worthless as it only increases the expenses of the issuing bank."


ADBL officials also said that they would have been compelled to pay a higher fee for underwriting as only a few merchant bankers could compete in the bidding process as per the earlier NRB directive. ADBL officials said that the bank's board would decide to approach SEBON within a day or two after meeting the required criteria. SEBON spokesman Niraj Giri said that the ABDL was most likely to get its approval the next time as it had ensured underwriting as per SEBON directives. "The disclosure related prerequisites are not so big problems," he added. The ADBL is issuing 30 percent of the shares to the public. With this IPO, the stake of the government in the ADBL will remain at 55.86 percent. The bank issued 14.14 percent of its shares to the public two years ago, especially to those who had been clients of the ADBL once.

Source: 
ekantipur.com

Three banks take the lion's share

Three merchant banks, NIDC Capital Markets Limited (NCML), NMB Bank limited and Ace Development Bank are neck and neck in business competition whereas the others are struggling hard. Out of 63 companies whose shares and debentures were issued last fiscal year, 18 chose NCML as their merchant bank, 17 went for NMB Bank and 13 settled with Ace Development Bank. This means the three occupied 76.19 percent business as a whole.

Citizen Investment Trust (CIT) received five clients, Nepal Finance (NEFINSCO) and Elite Capital four each, and Development Credit Bank and CIT/NCML one each. These three companies have ruled the roost during the past four months of the current fiscal year, too, with NMB getting business from six companies, NCML from five and the Ace from four. The Civil Capital got business from two companies and CIT from one.

Chief Executive Officer of NMB Upendra Poudel said that his bank pioneered shares applications through the internet and took other inventive measures that helped enhance its credibility and clients' trust. "We have been longer in the business, which has also helped us to win more clients," he added. Although there are 18 merchant bankers registered with the SEBON, only eight companies last year and four this year got business to manage the issuance of shares and debentures. Then, why are an increasing number of merchant banks coming up in the market? Niraj Giri, spokesman of Securities Board of Nepal (SEBON), said companies get attracted to this business as it opens many avenues, including issuance of shares, underwriting (guaranteeing to purchase share in case of non-subscription of shares), and portfolio management (making investment decisions using money other people have placed under his or her control) and registration of shares.

Besides 18 more companies already registered with the SEBON are awaiting final approval from the SEBON for merchant banking. They include Nabil Bank, Capital Investment and Development Company, National Investment and Capital Markets and Akash Investment. Financial institutions are attracted to this market as they want to reach wider market through mass marketing. "Many business opportunities have also been created in the capital market for the merchant bankers," Poudel added. Most of the jobs for the merchant banks have been related to rights share issuance, according to SEBON. Out of 18 companies receiving approval for issuing shares this year, 11 are for rights issues and the rest for ordinary shares. As many as 63 companies got approval to issue shares last year. Of these, 50 got approval to issue rights shares, 11 for ordinary shares and two for debentures.

Oversubscribed Asian Life IPO issue closes

KATHMANDU: Asian Life Insurance’s primary issue closed today after it was versubscribed more than tenfold.
“By the end of today we expect the collection to exceed Rs 1.65 billion,” said Ramesh Bhattarai, chief executive officer of Asian Life Insurance.
The Initial Public Offer (IPO) worth Rs 108 million of 10,80,000-units at a face value of Rs 100 per unit — was floated on October 27.
“After this public issue worth Rs 108 million, the paid-up capital of the company will be Rs 360 million,” he said adding there is Rs 252 million paid-up capital at present. At a time when the secondary market has been performing poorly, the encouraging response has shown that there is still an attraction for primary issue. “People may have found the IPO more lucrative as there has been no IPO for some time,” Bhattarai said.
Contrary to the banks and financial institutions, insurance companies declare bonus only once in three years. Of the total issue, 43,200-units are meant for the staff of the company. Contrary to other public issues, the company has allowed people to apply for minimum 10-units also.
The maximum limit for application was upto 20,000-units. After complaints about fake applications, Securities Board of Nepal (Sebon) has made it mandatory to apply with photo and bank account number for the primary issue. The regulatory authority of the capital market permitted the company on September 16 to go public and the Company Registrar’s Office gave the go-ahead on October 8.
NIDC Capital Markets was the issue and sales manager of the insurance company that has — according to unaudited accounts — posted Rs 3.32 million profit in the fiscal year 2008-09. The company has projected Rs 15.29 million profit for this fiscal year. According to its prospectus, it is not going to give any dividend for another three years.

Asian will be the 18th listed insurance company in Nepse as there are already 17 listed insurance companies — under Nepse’s insurance companies sub-group — with a total of 20,703,504-unit shares at Rs 100 face value making a total total paid up worth Rs 2,070,350,400.

Himalayan News Service

Asian Life Insurance to go public from October 27

Asian Life Insurance Company is floating 10,80,000-units -- worth Rs 108 million -- of primary shares at a face value of Rs 100 per unit from October 27. "After this public issue worth Rs 108 million the paid-up capital of the company will be Rs 360 million," said the company that has Rs 252 million paid-up capital at present. Of the total issue, 43,200-units are meant for the staff of the company. Contrary to other public issues, the company has allowed people to apply for minimum 10-units also and one can apply for a maximum of upto 20,000-unit.
One must apply with a passport size photo. After complaints about fake applications, Securities Board of Nepal (Sebon) has made it mandatory to apply with photo and bank account number for the primary issue. The regulatory authority of the capital market permitted the company on September 16 to go public and the Company Registrar's Office gave the go-ahead on October 8.
NIDC Capital Markets is the issue and sales manager of the insurance company that has -- according to unaudited accounts - posted Rs 3.32 million profit in the fiscal year 2008-09. The company has projected Rs 15.29 million profits for this fiscal year. According to its prospectus, it is not going to give any dividend for another three years. Asian will be the 18th listed insurance company in Nepse as there are already 17 listed insurance companies -- under Nepse's insurance companies' sub-group -- with a total of 20,703,504-unit shares at Rs 100 face value making a total paid up worth Rs 2,070,350,400.
However, their contribution is negligible -- around only one per cent -- in the total trading in the secondary market. The increase in the listed insurance companies in the secondary market might boost their contribution in the days to come. In the fiscal year 2007-08, there were only 21 insurance companies but in 2008-09 the number increased to 25. According to Nepal Rastra Bank, in the fiscal year 2008-09, the total paid-up capital of listed companies stood at Rs 61.1 billion -- an increase of 107.5 per cent in comparison to the fiscal year 2007-08.
This increase was due to the additional listing of securities. In the increased amount, the portion of rights shares was 30.7 per cent, bonus shares 6.3 per cent and ordinary shares 63 per cent. Comparatively, Nepse was flooded by rights shares as these increased by 55 per cent while bonus shares increased by 31 per cent and ordinary shares by 14 per cent. Nepse listed 37 companies' bonus shares worth Rs 1924.77 million, 50 companies' rights share worth Rs 9307.8 million and 14 companies' ordinary shares worth Rs 19087.5 million in the last fiscal year, according to the central bank. Meanwhile, a la Asian Life Insurance, Prime Life Insurance is also gearing for its public issue soon.

NIDC Capital Markets opens branch in Pokhara

NIDC Capital Markets Limited has opened its first branch in Pokhara. CA member Surya Bahadur KC inaugurated the branch amid a function on Friday. The function was also attended by chairman of the company Shivaji Roy Yadav, says a press release.

The company that has been providing merchant banking services had recently completed 17 years of services. It has long served the capital market as issue manager, share guarantor and portfolio manager. It also manages a mutual fund. The company operates with paid up capital of Rs 131.52 million and has been providing profit return worth 40 percent to its shareholders.

Standard Chartered Bank book closure hits Nepse

REPUBLICA
The market resumed trade this week after a week-long Dashain holiday. The first two days witnessed an uptrend in the market. However, the book closure of Standard Chartered Bank (-Rs 1,734) on October 6 for 50 percent cash dividend and 50 percent bonus shares made a massive impact on Nepse index (-4.15 percent) as the trading volume dropped by 36 percent.
The Commercial Banking sector saw a big fall (-6.69%). Nevertheless, Laxmi Bank (+Rs 69) which is distributing 7 percent bonus shares succeeded in posting one of the highest gains. BiratLaxmi Development Bank (+Rs 71) posted the highest gain of the week while Infrastructure Development Bank (-Rs.59) posted a big decline.
The Hydropower sector´s index (-1.36%) also slipped down as National Hydropower (-Rs 2) and Chilime Hydropower´s (-Rs 8) prices decreased.
Despite the huge fall in the market, the Finance sector (+0.23%) managed to climb up as prices of the shares of NIDC Capital Market (+Rs 100) and Pokhara Finance (+Rs 49) appreciated. Gorkha Finance´s Promoter Shares (-Rs 195) traded at a significant loss.
The insurance sector´s (+0.40%) index went up due to the increments in the share values of Nepal Insurance Company (+Rs21) and Lumbini General Insurance (+Rs 11). The index of ´Others´ went down due to a fallin the value of Nepal Telecom´s (-Rs 10).
Meanwhile, Nepal Rastra Bank is opening bids for 91-day Treasury Bills worth Rs 189 crore, 182-day Treasury Bills worth Rs 30 crore, 364-day Treasury Bills worth Rs 40 crore, 28-day Treasury Bills worth Rs 50 crore, and 91-day Treasury Bills worth Rs 80 crore.
Fewa Finance is auctioning its under-subscribed 13,195 units right shares. Lord Buddha Finance closed its right shares (2:1) on October 8.The market can be expected to witness downward trend with more book closures in offing next week.

NEPSE drops 5.04 points

Kantipur Report
KATHMANDU, Sept 8 - After a two-day upswing, the Nepal Stock Exchange (NEPSE) dropped 5.04 points on Monday. The sensitive index also declined by 1.45 points.
All the sub-indices at NEPSE witnessed a fall on Monday. The development bank index was the biggest loser dropping 6.66 points followed by the banking and other sectors which decreased by 5.81 and 4.7 points respectively.
The share market witnessed a total turnover of Rs. 98.40 million with 120,667 shares being traded. Shares of 69 companies changed hands on NEPSE.
Among the 23 commercial banks listed on NEPSE, Nabil Bank's promoter share posted the biggest growth with its stock rising by 52 points. Similarly, among the 15 development banks whose shares were traded on NEPSE on Monday, Bageshwori Development Bank witnessed the highest increase of 10 points while Biratlaxmi Bikas Bank dropped 63 points.
Among the 25 finance companies on NEPSE, Kaski Finance was the highest gainer with an increase of 18 points in its share price. NIDC Capital Markets lost 37 points.
The top winner on NEPSE was World Merchant Bank with a 3.7 percent rise in its stock price.
The top loser on was Biratlaxmi Bikas Bank which shed 7.43 points. Nabil Bank topped the chart in terms of turnover with Rs. 25.43 million.