The Nepal Rastra Bank (NRB) on Thursday gave approval in principle to the sales of the Nepali promoters’ shares in the Nepal Bangladesh Bank (NBB) to Bangladeshi promoter International Finance Investment and Commerce (IFIC) Bank.
The Bangladeshi promoter, which currently has 10 percent stake in the bank, aims to take over all 26 percent of Nepali promoters’ shares and 15 percent share of Bank Asia, another Bangladeshi partner, to hold majority stake in the bank.
The central bank board meeting on Thursday gave a go ahead to such sales after Finance Ministry’s opinion that sales of Nepali prompters’ shares to Bangladeshi prompter would not be an insider trading, which is banned as per the Bank and Financial Institution Act (BAFIA) a month ago.
“Along with the approval in principle, we have also put certain condition such as ensuring recovery of loans that went to the promoter group while selling the promoters’ shares,” said a board member of the central bank.
Given the bank has to recover loans worth around Rs 1.4 billion from people who are related to its key promoter, NB Group, the central bank had told the NBB to open separate account at the central bank to deposit amount received after selling the shares. “The amount will first be used to recover the promoter related loans,” said the NRB board member. The IFIC will have to take approval also from Bangladeshi central bank to take over shares from Nepali promoters.
Although the NRB had received the proposal on allowing the sale of Nepali promoters’ shares to Bangladeshi shareholders much earlier, the board could not take a decision due to strong opposition from some of its members “having close connection with the NBB promoters.”
The Act bars directors, chief executives, auditors or secretaries of banks and financial institutions (BFIs), or those directly involved in the BFIs from selling/purchasing shares of the companies (or subsidiaries) under their own name or their family members and their companies until one year from the time they left those companies.
However, the Finance Ministry argued that the transaction would not be an insider trading given both seller and buyer of the promoter’s shares would be well aware about the financial status of the bank.
After the central bank decision, the NBB CEO Gyanendra Dhungana said that the share selling process to IFIC would accelerate. “First of all, we will carry out due diligence audit (DDA)) of the bank to determine exact value of the bank’s shares and sales of shares will begin,” said Dhungana, hinting that the process could take around one and half months.
Posted on: 2012-11-09 09:14