KATHMANDU: The mega-merger between Nepal’s two pioneer banks, Nepal Investment Bank (NIBL) and Himalayan Bank Limited (HBL), has been delayed owing to the rift between these two banks over consortium financing made in Smart Cell, a telecom firm.
The consortium of NIBL and Prime Bank is learned to have financed Rs 6 billion to Smart Cell, a company which is fighting for its survival. While NIBL have financed Rs 4.5 billion to the struggling telecom firm, Prime Bank have disbursed Rs 1.5 billion loan to the company. As NIBL leads the consortium financing the Smart Cell and the bank is finding it difficult to recover this loan from the telecom company, HBL board have put forth a condition to go into merger with NIBL only after NIBL settles recovery of this loan from Smart Cell. As the result, the the much-hyped merger between NIBL and HBL is lingering since long time, sources confirmed.
“Though merger agreement between these two banks should have been inked long before, it could not take place timely due to Rs 6 billion loan that NIBL is yet to recover from the telecom company. HBL has asked to settle this recovery from Smart Cell and open doors for merger as soon as possible,” informed a source.
On the other hand, Smart Cell is preparing to sell its shares to Ocean Cable and Communication (OCC Corporation), a Japanese manufacturer of communication infrastructure. The Yokohama-based manufacturer of submarine communications cable and Smart Cell have reached a sales-purchase deal to this effect on February end and top level officials of both companies were involved in the agreement process.
Both NIBL and HBL have prepared DDA from their respective sides for computing the values for the swap ratio and as agreed by both banks, the swap ratio will be around 1:1.
If everything go as planned, NIBL and HBL are planning to start joint operation from July 16. If the merger between NIBL and HBL becomes successful, the merged entity will be Nepal’s largest commercial bank with almost Rs 25 billion paid-up capital. AT present Global IME bank is the largest commercial bank in Nepal in terms of various indicators.