Nepal Rastra Bank (NRB) has once again postponed letting go of the management of Nepal Bank Limited (NBL) for another six months. The central bank was scheduled to stop looking after its affairs in mid-January. The extension means the central bank will keep its hold on NBL until the end of the fiscal year.
NRB said the deadline had to be extended as NBL’s current management required additional time to implement its capital plan fully, particularly the plan to sell off the bank’s fixed assets to improve its capital status. A decade ago, the central bank took over the management of the country’s oldest bank after it went into a tailspin. The government has a large stake in the bank.
NBL’s capital adequacy ratio (CAR) is positive by 0.4 percent as of the first quarter of the fiscal year after continuous state of negative CAR for a decade. As per the central bank’s directive, its CAR needs to be positive by at least 10 percent. “The bank has failed to sell its fixed assets and recapitalize due to outside factors,” said NRB Spokesperson Bhaskarmani Gnawali. “The deadline has been extended to complete the task as per the bank’s capital plan.”
According to Maheshwor Lal Shrestha, chief of the management committee at NBL, the troubled bank has two tasks it needs to complete - selling the fixed assets as per the capital plan and preparing the balance sheet to hold annual general meeting. Although NBL had planned to raise Rs 2 billion by selling off its prime fixed assets, it has not been able to do so.
Initially, the bank was supposed to sell its assets to only government-owned entities. It later expanded its options and decided that it was okay to sell them to private parties too. NBL officials said that the two-tiered selling mechanism delayed the sale of its properties while a prolonged recession in real estate also made it a difficult task.
“We have received the government’s go-ahead to sell our possessions to anybody who wants to buy them,” said Shrestha. “We plan to issue a notice putting some of the assets up for sale by mid-February.”
As per the recapitalization plan, its shareholders subscribed to rights shares on a 1:9.5 basis, swelling its paid-up capital from Rs 380 million to Rs 4 billion. However, since that would not be sufficient to boost the CAR to the required level, the recapitalization plan has envisaged selling off the bank’s fixed assets.
source: the kathmandu post,20 jan 2014
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NRB said the deadline had to be extended as NBL’s current management required additional time to implement its capital plan fully, particularly the plan to sell off the bank’s fixed assets to improve its capital status. A decade ago, the central bank took over the management of the country’s oldest bank after it went into a tailspin. The government has a large stake in the bank.
NBL’s capital adequacy ratio (CAR) is positive by 0.4 percent as of the first quarter of the fiscal year after continuous state of negative CAR for a decade. As per the central bank’s directive, its CAR needs to be positive by at least 10 percent. “The bank has failed to sell its fixed assets and recapitalize due to outside factors,” said NRB Spokesperson Bhaskarmani Gnawali. “The deadline has been extended to complete the task as per the bank’s capital plan.”
According to Maheshwor Lal Shrestha, chief of the management committee at NBL, the troubled bank has two tasks it needs to complete - selling the fixed assets as per the capital plan and preparing the balance sheet to hold annual general meeting. Although NBL had planned to raise Rs 2 billion by selling off its prime fixed assets, it has not been able to do so.
Initially, the bank was supposed to sell its assets to only government-owned entities. It later expanded its options and decided that it was okay to sell them to private parties too. NBL officials said that the two-tiered selling mechanism delayed the sale of its properties while a prolonged recession in real estate also made it a difficult task.
“We have received the government’s go-ahead to sell our possessions to anybody who wants to buy them,” said Shrestha. “We plan to issue a notice putting some of the assets up for sale by mid-February.”
As per the recapitalization plan, its shareholders subscribed to rights shares on a 1:9.5 basis, swelling its paid-up capital from Rs 380 million to Rs 4 billion. However, since that would not be sufficient to boost the CAR to the required level, the recapitalization plan has envisaged selling off the bank’s fixed assets.
source: the kathmandu post,20 jan 2014
LINK
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