Print Edition - 2014-12-03 | MONEY
NMB Bank signs merger deal with Clean Energy
Dec 2, 2014-
NMB Bank has signed a merger agreement with Clean Energy Development Bank barely two months after concluding similar pacts with Pathibhara Development Bank and Bhrikuti Development Bank. The deal with Clean Energy was sealed on Tuesday.
The mergers will turn NMB into one of the largest banks in Nepal in terms of paid-up capital. Its paid-up capital will swell to Rs 3.93 billion after amalgamating with Clean Energy and the two other development banks. Similarly, the overall capital base including reserves will cross Rs 4.8 billion, said Upendra Poudel, chief executive officer of NMB Bank.
Currently, NMB’s paid-up capital amounts to Rs 2 billion while that of Clean Energy is Rs 1.14 billion. Bhrikuti’s paid-up capital is Rs 423.78 million and Pathibhara has a paid-up capital of Rs 115 million.
As per the merger bylaws, they are required to complete their union within the next six months. The merged entity will retain the name NMB Bank.
“As we are also in the process of merging with Clean Energy Development Bank, Nepal Rastra Bank has delayed providing a letter of intent for merger with the two other development banks with which we have already signed an MoU,” said Poudel. “The central bank has told us that the letter of intent will be issued at one go.”
Following the merger with Clean Energy, NMB Bank will have a foreign shareholder too as FMO Development Bank of the Netherlands owns 14 percent of Clean Energy.
Although a Malaysian company Yong Lian Realty also has a 12.9 percent stake in NMB, the central bank has told it to divest its shares in Nepali banks and financial institutions by mid-July 2015. The central bank has prohibited foreign companies other than banks and financial institutions from owning shares in Nepali banks.
However, Poudel said that following the merger with Clean Energy, FMO’s stake in NMB will expand, but it has not been confirmed by how much it will grow.
He added that following the merger, a due diligence audit of both the bank and development banks would take place to determine the swap ratio of their shares.
Published: 03-12-2014 09:33