Rastriya Banijya Bank (RBB) plans to issue 30 percent shares to the
general public within this fiscal year. The initial public offering
(IPO) will be worth more than Rs 3 billion.
The bank, which fulfilled the capital adequacy ratio requirement in the second quarter to fully recover from the crisis, said it sought the government’s approval for the proposed IPO last week.
RBB, which was on the brink of collapse due to massive loan defaults, had undergone the financial sector reforms programme for over a decade.
The bank turns healthy as it prepares to celebrate its golden jubilee. It enters into 50 years of operation on January 24, 2015.
Supervision reports of the Nepal Rastra Bank (NRB) have time and again directed the state-owned bank to go public as per the Bank and Financial Institution Act 2006.
RBB said the IPO will change its shareholding structure and the participation of the public will help it grow.
RBB’s IPO plan comes at a time when another government-owned bank—Agriculture Development Bank Limited—is seeking a foreign strategic partner to enhance competence.
“Rather than bringing in a strategic partner, we think going public will help the bank achieve sustainable growth,” RBB Chairman Rewat Bahadur Karki said at a press meet here on Sunday.
The bank has seen several ups and downs in its five-decade journey, but the last decade was the most painful. Now, it boasts a capital adequacy ratio (CAR) of 10.05 percent, which meets the NRB directive.
The central bank terms commercial banks with less than 10 percent CAR “unhealthy”.
Before the implementation of the reform programme on January 16, 2003, the bank’s CAR was negative by 33 percent and its net worth was negative by Rs 23 billion. The net worth is now positive by Rs 6 billion.
The bank has lowered the non performing loan (NPL) level to 4 percent from once more than 60 percent. It has been earning profits for last six years. Last year, it earned a net profit of Rs 1.75 billion.
RBB also plans to expand its businesses. A credit-to-deposit (C/D) ratio of just 61 percent gives the bank a huge space to expand credit.
It plans boost its credit disbursement by Rs 15 billion to Rs 77 billion by this fiscal year.
As per the NRB directive, the CD ratio should be kept at 80 percent. “But we want to maintain the ratio at around 70 percent,” RBB CEO Krishna Prasad Sharma said. “This is because we have to have adequate liquidity as we are government-owned bank.”
The government makes payments to contractors involved in various development activities through RBB, among other state banks.
The bank said it would make available agriculture loans at just 5 percent interest although the government plans to issue the loans at 6 percent interest to the youths.
It will also expand its presence by re-opening branches displaced during the conflict.
source: the kathmandu post,5 jan 2015
LINK
The bank, which fulfilled the capital adequacy ratio requirement in the second quarter to fully recover from the crisis, said it sought the government’s approval for the proposed IPO last week.
RBB, which was on the brink of collapse due to massive loan defaults, had undergone the financial sector reforms programme for over a decade.
The bank turns healthy as it prepares to celebrate its golden jubilee. It enters into 50 years of operation on January 24, 2015.
Supervision reports of the Nepal Rastra Bank (NRB) have time and again directed the state-owned bank to go public as per the Bank and Financial Institution Act 2006.
RBB said the IPO will change its shareholding structure and the participation of the public will help it grow.
RBB’s IPO plan comes at a time when another government-owned bank—Agriculture Development Bank Limited—is seeking a foreign strategic partner to enhance competence.
“Rather than bringing in a strategic partner, we think going public will help the bank achieve sustainable growth,” RBB Chairman Rewat Bahadur Karki said at a press meet here on Sunday.
The bank has seen several ups and downs in its five-decade journey, but the last decade was the most painful. Now, it boasts a capital adequacy ratio (CAR) of 10.05 percent, which meets the NRB directive.
The central bank terms commercial banks with less than 10 percent CAR “unhealthy”.
Before the implementation of the reform programme on January 16, 2003, the bank’s CAR was negative by 33 percent and its net worth was negative by Rs 23 billion. The net worth is now positive by Rs 6 billion.
The bank has lowered the non performing loan (NPL) level to 4 percent from once more than 60 percent. It has been earning profits for last six years. Last year, it earned a net profit of Rs 1.75 billion.
RBB also plans to expand its businesses. A credit-to-deposit (C/D) ratio of just 61 percent gives the bank a huge space to expand credit.
It plans boost its credit disbursement by Rs 15 billion to Rs 77 billion by this fiscal year.
As per the NRB directive, the CD ratio should be kept at 80 percent. “But we want to maintain the ratio at around 70 percent,” RBB CEO Krishna Prasad Sharma said. “This is because we have to have adequate liquidity as we are government-owned bank.”
The government makes payments to contractors involved in various development activities through RBB, among other state banks.
The bank said it would make available agriculture loans at just 5 percent interest although the government plans to issue the loans at 6 percent interest to the youths.
It will also expand its presence by re-opening branches displaced during the conflict.
source: the kathmandu post,5 jan 2015
LINK
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