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Bageshwori, Shangri-La to merge
KATHMANDU, AUG 15 -
Bageshwori Development Bank of Nepalgunj and Shangrila Development Bank of Pokhara have decided to merge. The boards of the two financial institutions (FIs) have written to Nepal Rastra Bank (NRB) about their decision.
They have also formed a merger team and a technical team to spearhead the process.
Officials of the two FIs said that they decided to unite to become a national level development bank with good presence in the Western and Far Western regions. A national level development bank is required to have a paid-up capital of Rs. 640 million. Officials said they planned to merge the two development banks within the current fiscal year.
Harka Gurung, chief executive officer of Shangrila, said that it would increase its promoter shares to Rs. 224 million and raise the capital base to Rs. 32 billion with an initial public offering (IPO).
Bageshwori is issuing rights shares which will increase its paid-up capital to Rs. 207.9 million. “We will issue rights shares further to increase the paid-up capital to Rs 320 million,” said Bageshwori CEO Rajendra Poudel. However, they will have to get the merger plan endorsed by their respective annual general meetings (AGM).
Officials of the two companies said it would be easy for them to merge because a number of the promoters of one company own shares in the other company too. Sangrila’s chairman Bishwash Gauchan is also founder chairman of Bageshwori.
The central bank is also positive about the merger plan of the two development banks. NRB has stated in the monetary policy that it would provide incentives to encourage mergers and acquisitions. An NRB official said that both of them would have to prepare due diligent reports (like a white paper) and the AGMs of the two banks would have to endorse the plan.
There has been only one merger in the banking sector so far. Narayani Finance of Narayangadh and National Finance of Kathmandu combined to form Narayani National Finance. Earlier, Hisef Finance had amalgamated with Laxmi Bank, but the two are subsidiaries of the Khetan Group. The central bank has a policy to encourage mergers between BFIs to enable them to compete with international banks with the country having opened the door to them.
Meanwhile, Nepal Sri Lanka Merchant Bank Limited (NSMBL) has also decided to merge with Nepal Bangladesh Bank (NBB). The central bank has received a letter from NSMBL saying that it had stopped trading of its shares
on the secondary market for
the purpose of amalgamating with NBB.
Posted on: 2010-08-16 07:55
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