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

Sebon guidelines for share structure of merged firms

The capital market regulator is working on bringing in new regulations regarding the determination of share structure of the merged public companies. As the merger and acquisition (M&A) of various banks and financial institutions has been gaining momentum since some time back, Securities Board of Nepal (Sebon), the securities market regulator, has also felt the need for introducing a new regulation that will clarify how the share structure of the merged companies has to be determined.

"Sebon is doing internal homework on the regulation for the merged companies regarding the determination of share structure," said Niraj Giri, director of Sebon. "There is a need for clarifying how the merging companies will distribute the shares to the common shareholders so that the minority shareholders' interest is not damaged," he added.

There is no clear-cut rules set by any authority that dictates how the share should be distributed in case of the merger. Since Sebon is the apex body to regulate share market, the responsibility of preparing the guidelines regarding the matter falls on it. Moreover, most of the banks and financial institutions that are in the process of merger are listed in the secondary market. Before the merger is accomplished, the companies need to finalise the share structure. If both the merging companies have issued shares to the public then determining the new share structure has to be more carefully done so that the shareholders of the two entities will not feel duped.

There have already been four mergers of the financial institutions have taken place in the history of Nepali financial institutions. The recent merger is the one between class `A' financial institution Nepal Bangladesh Bank and Nepal Sri Lanka Merchant Banking and Finance Ltd that took place last month. Apparently, the shareholders of NSLMB are entitled to get the shares of NBBL in the 2:1 proportion that is for every two units of NSLMB's shares the shareholders will get one unit of NBBL's share.

Both the fiscal and monetary policies for the present fiscal year has encouraged merger of financial intermediaries such as banks and financial institutions (BFIs). The central bank specially has made it clear that it will support the merger of financial institutions rather than opening of new banks and financial institutions in the present scenario that has been crowded with the banks and financial institutions. The fiscal policy had even introduced some incentives to encourage mergers. The merger is supposed to facilitate the capital requirement of the financial institutions and reduce their operational costs as well along with creating space in the crowded financial institutions.

Source:
tht

Merger : Nepal Bangladesh Bank & Nepal Sri Lanka Merchant Bank

After four years of twists and turns, the merger between Nepal Bangladesh Bank Limited (NBBL) and Nepal Sri Lanka Merchant Bank Limited (NSLMB) is finally taking place. The Nepal Rastra Bank gave the go-ahead for the merger last week. In the event of the merger taking place, it will be the first in 2011 and the fourth in the country's banking history. About three weeks ago, the central bank had disqualified the institutions' merger announcement, saying that they did not follow due procedures as per the as per the Bank and Financial Institution Act (BAFIA) prior to announcing the merger.

"The merger will be effective from Jan. 23," said Prithvi Raj Ligal, chairman of the merger committee formed by the two financial institutions. The central bank will issue a notice of merger after receiving request from the institutions. NRB officials, however, said that they were yet to receive a formal letter from the institutions, requesting the central bank to issue a merger notice. NRB has told the institutions to complete the merger process within next 90 days.

This will be the second merger of the financial institutions promoted by the NB group. NBBL and NB Finance had merged four years ago. Other mergers that took place in the country are between Laxmi Bank and Hisef Finance¿both promoted by Khetan Group¿and Narayani Finance and National Finance. "The NBBL-NSLMB merger will encourage other financial institutions to go for merger," said Ligal, who is also the chairman of Nepal Credit and Commerce Bank. The government and the central bank have given high priority to mergers of bank and financial institutions (BFIs). The government has changed the existing provision of taxing assets and liabilities as disposal after mergers, making it non-taxable. The central bank is also mulling facilities to be provided to encourage mergers.

Following the NBL-NSLMB merger, the paid-up capital of NBB will surpass Rs 2 billion mark, a requirement which banks should meet by fiscal year 2012-13. Currently, NBB has a paid-up capital of Rs 1.86 billion and the paid-up capital of NSLMB is Rs 300 million. However, NBBL has to bear the liabilities of NSLMB as per the BAFIA. NSLMB owes Rs 60 million to Madhyamanchal Grameen Bikas Bank and Rs 149.2 to the Nepal Army.

"We decided to allow the merger to save NSLMB form collapse," said a senior NRB official. "The merger may affect the financial situation of NBBL. However, in the event of NSLMB's collapse, depositors' confidence in the financial system, which is already coping with acute liquidity crisis, would weaken." After the merger, the head office and branches of NSLMB will be converted into NBL branches. NSLMB staff will be assimilated to the NBB staff.

Boards of both the institutions have agreed to appoint NSLMB staff in posts two levels lower than those they currently hold. However, some of the NBBL employees are opposing this provision, saying that the NBBL board had assured them that NSLMB staff would be appointed in posts four levels lower than those they currently hold. "The management has assured us in writing," said Rabin Shakya, president of Employees Union of NBBL. On the other hand, NSLMB employees are saying that the appointments have to be made according the decision taken by the boards of the two institutions. "If not done as per the boards' decision, it will be our humiliation," said a senior NSLMB officer. The NBBL will not be changed even after the merger. "NRB did not allow us to change the board as per the changed shares structure," said Laxmi Bahadur Shrestha, director of NBBL

Source:
ekantipur

Nepal Bangladesh Bank's first-aid camp

Nepal Bangladesh Bank (NBB) in collaboration with Alka Hospital organised a first-aid camp in the premises of Pashupatinath temple on the occasion of Teej. The camp provided free first-aid service to more than 1,000 people, said a release from the bank

Source: 
tht

NB Bank opens 18th branch

Nepal Bangladesh Bank on Thursday opened its 18th branch at Sallaghari in Bhaktapur. Issuing a press release, the bank said that the branch will provide all modern banking services to its customers. The branch also has automated teller machine (ATM) services. Prior to this, the bank was operating 17 branches and its client base stood at 115,000. The bank has also revised its special fixed deposit schemes, under which the customers can now open accounts at Rs 111,000. Previously, the customers could open accounts under this scheme at Rs 555,000. The bank has is also planning to install seven new ATMs within this fiscal. It also formally launched internet banking services from Thursday. The bank also said that it would start issuing loans against gold and gold jewelries by the end of this fiscal.

Source: myrepublica.com

NEPSE Weekly Update

09-Oct-09
Jamb Daily News Service
This week, the benchmark index at home bourse moved one step forward and two steps back primarily led by financial stocks. Following the weeklong holiday on Dashian festival the sole secondary market kicked up with spurring gains on initial couple of days, however failed to sustain its gains on price adjustment of Standard Chartered Bank after book closing date. SCB closed its book from 6th Oct. to 4th Nov. 09 for the purpose of having its Annual General Meeting on 4th Nov. 09 which will approved 50% cash and 50% stock dividends from the profit of fiscal year 2008/09. Along with SCB other key companies at Nepal stock exchange dragged down on pessimistic outlook amid growing chaos on political and economical milieu.
The benchmark Nepse index added 3.89 and 2.43 points for consecutive opening days respectively to 636.87 on Monday however plummets to 613.18 on Tuesday as price of SCB fell 26.67 percent to Rs. 3960 after book closing date along with other downswing financial stocks. At the closing session of week, the battered outlook of investors withdrew their hands from most of the financial stocks that led Nepse index to settle at 604.37 down 30.07 points or 4.74 percent.
Commercial banks which command the most trading volume at sole secondary market dipped hefty of 50.53 points or (-7.90%) to 588.96 from the opening of 639.49 Sunday. The biggest losers of the week from commercial banking sectors were SCB that lost 32.90% to Rs. 3620, NMB Bank fell 4.91% to RS. 368, DCBL Bank slid 4.57% to Rs. 334, Nepal Bangladesh Bank tumbled 4.32% to Rs. 288 along with others banks. Likewise, development bank slid 15.68 points to 653.65 from opening of 669.51 fronted by loss on Annapurna Bikash Bank (Rs. 431, -7.31%) and Swabalamban Bikash Bank (Rs. 650, -6.61). Finance plummet diminutive of 0.35 points to 635.14 while others dragged down 5.88 points to 646.19. However, hydropower surged 3.59 points to 827.69 from opening of 824.10 along with 1.89 points augment in insurance sector.
Dragged down in scrip price of Standard Chartered along with other financial stocks dented the Sensitive index. At the closing session of week, 78 scrip domestic blue chip slump 11.11 points or (-6.78%) to 152.52. Sensex consist 14 commercial banks, 37 finance companies, 15 development bank, 10 insurance companies and one each from hydropower and manufacturing companies. Similarly, float Index an indicator of performance of ordinary shares in the market lost 2.80 points 57.84.
Merely 90 companies registered their presence in the secondary market over this week. Losers overshadowed the market as 22 companies advanced and 47 companies declined. All in all 542,852 shares traded via 4141 transaction over the week. Moreover, Rs. 280,732,672 turnovers were realized along with Rs. 2,171,138.41 million market capitalizations.
This week, Standard Chartered Bank topped the chart of turnover amounting to Rs. 52.60 million, in terms of share quantity Nepal Bangladesh Bank lead the rank with 165000 units' shares and Pashupati Development Bank fronted in number of transaction with 546 transactions.
During the week, Nepal Express Finance listed 240000 units right share and 1075654 units bonus shares of Kumari Bank along with 600000 units ordinary shares of Api Finance has been listed in Nepal Stock Exchange.

Financial Stocks Fronted Nepse Downhill

Jamb Daily News Service
Nepal Stock Exchange sagged down for second day in a row on Wednesday primarily led by financial stocks. Standard Chartered Bank (Rs. 3564, -10%) closed its book from 6th Oct. to 4th Nov. 09 for the purpose of having its Annual General Meeting on 4th Nov. 09. SCB, one of the leading commercial banks with spurring profit has proposed 50 % cash and 50% stock dividend to its shareholders. After week long Dashain holiday, Nepse had surged for consecutive two days however the gains were capped by two regular slumps in preceding days after SCB's book close.
The benchmark Nepse index plummets 5.32 points or 0.87 percent to 607.86, following yesterday's nosedived of 23.69 points or 3.72 percent. Nepali stock market is moving through deviant slump for months hammered by several gloomy news. Moreover, series of off-putting news as, ambiguous understanding of paid up capital provision on Monetary policies, floating of promoters share in the market, listing of dividend and right shares augmenting shares outstanding amid growing turmoil within political parties dented the growth of Stock market. However, fair profits by companies along with dividend declaration has provided hope for stock uphill, but investors were less concerned on profits and were throwing selling orders.
Dragged down in scrip prices of most of the financial stocks smashed the Sensitive index to 153.66, losing 2.14 points or 1.37 percent. 78 scrip Sensex consist, 14 commercial banks, 37 finance companies, 15 development bank, 10 insurance companies and one each from hydropower and manufacturing companies. However, float Index an indicator of performance of ordinary shares in the market was up 1.50 points to 58.18.
Commercial banks which commands the titanic volume of trade at Nepal Stock Exchange plummets 11.38 points or 1.88 percent to 592.86, led by fall in price of SCB. Likewise, development bank slid 5.30 points or 0.80 percent to 661.24, finance dropped 0.51 points. However, rise in share price of Chilime Hydropower (Rs. 1046, +Rs. 21) escorted the hydro index to 821.57 adding 6.80 points , insurance index put on diminutive of 0.49 points while others added 1.18 points as price of Nepal Telecom increased by Rs. 2 to Rs. 550.
Merely 66 companies registered their presence in the secondary market with 25 gainers and 34 losers. The A-D ratio was maintained at 0.74. All in all 152892 shares traded today via 1059 transactions. Moreover, Rs. 69759919 turnover was realized along with Rs.426176.76 million market capitalizations. Nepal Bangladesh Bank accounted for huge turnover of Rs. 14,748,350 followed by Citizens Bank's Rs. 5,921,130 and SCB's Rs. 5,432,210. Yesterday, 163259 shares traded today via 695 transactions amounting to Rs. 60717850 turnover along with Rs.429904.86 million market capitalizations.
The top five standouts of the day are NMBF(4.49%), PFL( 3.8%), LGIL( 3.78%), KMBF( 2.48%), SIL(2.29%). Whereas, GFCLPO(-48.61%), SCB( -10%), NDEP( -5.67%), LFLC( -3.91%), HGI( -3.85%). comprised of the top five losers.

Banks drop in Non-Performing Loan

Kantipur Report
KATHMANDU, Sept 7 - The commercial banks are doing fine by and large in terms of reduction in their Non-Performing Loan (NPL) in the previous fiscal year, according to the central bank.
While 16 of the 25 banks witnessed a drop in their NPL, three saw it rising, states a recent report of Nepal Rastra Bank (NRB).
Financial institutions with NPL hovering below five percent are considered sound.
The NPL of Nabil, Machhapuchhre and Development Credit Bank Limited went up slightly but it is still manageable with Nabil having 0.8 percent at the lowest and Machhapuchhre with 2.8 percent at the highest.
The rise and fall of the NPL in case of Global Bank, Citizens Bank, Prime Bank, Sunrise Bank and Bank of Asia could not be assessed as they have not reported their their NPL status to the
central bank either in the last fiscal year or the previous year or both years.
NIC bank's NPL remained constant at 0.9 percent in both years.
NCC bank has been able to reduce its NPL significantly last year from 16.36 percent to 2.7 percent during the 12-month period.
Chief Executive Officer of NCC Bank Ratna Raj Bajracharya said recovery of loans from some major groups - including the N.B. group, which is also the promoter of the NCC bank - was the principal reason behind sharp decline in the NPL of NCC.
"The Harisiddhi Brick Factory owned by N.B Group itself had owed the bank five percent NPL," he said. "We acquired its lands as a part of recovery." The bank was to recover loans of Rs. 330 million from Harisiddhi.
The bank also acquired
the lands owned by Tribeni Distillery to recover around Rs. 60 million loans last year, Bajracharya said.
"We will reduce the NPL to one percent within the next six months," he said.
There are still five banks whose NPL level is higher than five percent: Nepal Bank Limited, Rastriya Banijya Bank, Nepal Bangladesh Bank, Lumbini Bank and Agriculture Development Bank.
RBB CEO Janardan Acharya said they would reduce the NBL below five percent within
the next two years. The government owned bank has still 15.7 percent NPL which represents
Rs. 4.9 billion.
"We have plans to recover around Rs. 2.5 billion this year and recovery of the remaining amount in the next year," he said. The bank recovered Rs. 2.4 billion in the last fiscal year.NPL Change in TOp 20 Banks
2007/08 2008/09
Bank NPL (%) NPL (%)
NBL 8.05 5.9
RBB 21.63 15.7
Nabil 0.79 0.8
NIBL 1.12 0.8
StanChart 0.92 0.7
HBL 2.36 2.2
NSBI 3.65 2.0
NBBL 31.11 19.3
Everest 0.64 0.5
BoK 1.76 1.3
NCC 16.36 2.7
NIC 0.90 0.9
Lumbini 14.87 9.1
MBL 1.04 2.8
Kumari 1.35 0.4
Laxmi 0.13 0.1
Siddhartha 0.60 0.5
ADBL 10.40 8.8
DCBL 1.26 1.6
NMB 1.52 0.5

NEPSE makes another downfall

KATHMANDU, Aug 26 - The Nepal Stock Exchange (NEPSE) Tuesday lost 14.47 points on the trading floor. The sensitive index also decreased by 4.8 points.
A majority of the sub-indices on NEPSE saw a decline on Tuesday. The banking sector lost the most by shedding 23.42 points followed by the insurance, finance and development bank sectors which went down by 1.66 points, 1.07 points and 0.58 point respectively.
The share market witnessed a total turnover of Rs. 86.36 million with 123,722 shares being traded. Shares of 55 companies changed hands on NEPSE.
Among the 21 commercial banks listed on NEPSE, Laxmi Bank posted the biggest growth with its stock rising by 6 points while Nabil Bank lost the most on the trading floor by shedding 290 points.
Similarly, among the 10 development banks whose shares were traded on NEPSE, Ace Development Bank witnessed the highest increase of 11 points while Triveni Bikas Bank dropped 14 points.
Among the 15 finance companies on NEPSE, ICFC Bittiya Sansthan was the highest gainer with an increase of 9 points in its share price. NIDC Capital Markets lost 22 points.
The top five winners on NEPSE were Ace Development Bank with a 2.33 percent rise in its stock price followed by ICFC Bittiya Sansthan, DCBL Bank, Butwal Power Company and Chilime Hydropower Company. Similarly, the top five losers on Tuesday were Nepal Investment Bank which fell by 9.92 percent followed by Kumari Bank, Nabil Bank, Global Bank and Nepal Bangladesh Bank.
Butwal Power Company topped the chart in terms of turnover with Rs. 10.18 million. - Kantipur Report