Fiscal Nepal
First Business News Portal in English from Nepal
KATHMANDU: Nepal Investment Bank Limited and Himalayan Bank Limited (HBL, which have already agreed to go merger, have started searching for a third commercial bank for the merger to ensure that the merged entity’s total capital reaches Rs 50 billion.
As per NIBL and HBL sources, the board of these banks have adopted a strategy to bring in yet another commercial bank.
After merger, the Himalayan and Investment Bank, the new entity, will have a paid up capital of Rs 26.96 billion and a reserve of Rs 19.74 billion. Accordingly, the bank’s core capital will reach Rs 46.69 billion, the highest among the operating banks in Nepal.
“We want to become a bank with a capital of Rs 50 billion. For that, there is no alternative to acquiring another bank,” said Jyoti Pandey, CEO of NIBL adding, “We are now focusing on settling the merger with HIBL. As soon as it completes, we will start searching for another possible bank to acquire.”
Even the Nepal Rastra Bank (NRB) had been suggesting NIBL and HBL to acquire Civil Bank or any other small bank during their merger.
Ashok Rana, CEO of Himalayan Bank informed that preliminary discussions have been held with some small banks for for merger. “We will start the process of merger with another bank as soon as we complete merger process with NIBL,” said Rana.
NIBL and HBL had formally agreed to enter merger process by inking the merger agreement last week. If everything go as planned, the two banks plan to complete all merger processes within next two months and start integrated transaction from beginning of the next fiscal year, possibly from July 16 itself.
It has been agreed that Prithvi Bahadur Pandey and Ashok Rana will be the chairman and CEO, respectively, of the merged bank while Jyoti Pandey will be the deputy CEO.
Following merger agreement between NIBL and HBL, Nabil Bank has also intensified discussions with some commercial banks for merger/acquisition.
There are 27 commercial banks in the country and will be reduced to 26 after NIBL and HBL start integrated transactions. Experts have been suggesting that almost 12-15 commercial banks will be enough in country like Nepal where the banking industry, market and the entire economy is comparatively small.
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