SAGAR GHIMIRE
Nepal Bangladesh (NB) Bank Ltd has decided to divest its stakes in NB Insurance Company Ltd through open auction after Nepal Rastra Bank (NRB) rejected the bank´s plan to revive the non-life insurance company.
NB Bank issued a public notice on Monday to sell 642,500 units of promoter´s shares, 45 percent stake, in NB Insurance through open auction.
The bank was required to offload its holding in NB Insurance as the central bank does not allow commercial banks to hold more than 10 percent stakes in other institution.
“Since the central regulatory bank has already issued directive, limiting a bank´s holding in other company, we have decided to divest our shares at the NB Insurance,” NB Bank CEO Gyanendra Prasad Dhungana told Republica. He, however, said that the bank was yet to decide on whether to retain 10 percent holding or divest all stakes.
"We have invited bids for auction of all our promoters´ shares. But we have put a clause that says the bank can take decision on complete or partial bids," Dhungana said, adding, "That will depend on the type of investors who approach us to buy shares."
NB Insurance is promoted by NB Group which also has stakes in Nepal Bangladesh Bank, Nepal Credit & Commerce Bank, Harisiddhi Brick and Tiles Factory and National Hydropower Company.
The bank´s decision to offload its holding in NB Insurance has pushed the possibility of immediate revival of the troubled insurance company into uncertainty. Insurance Board (IB), the insurance sector regulator, has directed officials of NB Insurance to come up with revival plan by mid-November.
According to IB officials, NB Bank had told the insurance regulator that it plans to develop NB Insurance as its subsidiary company. "The bank´s officials had assured us that they would come up with a plan to revive the troubled insurance company as its subsidiary. We are positive about the proposal," Raju Raman Poudel, director of IB, told Republica. "However, it seems that the bank has retracted from its pledge."
IB had stopped the NBB Insurance from making any transaction in December last year after the troubled company failed to abide by the regulator´s directives. Officials of the company were involved in different irregularities like flouting reinsurance guidelines, misusing premium amount collected from public, depositing its money at a finance company in an unauthorized manner, and embezzling fund while taking office building on lease.
The due diligence audit report conducted by the IB had showed that the company has far higher liabilities than the assets. According to IB officials, the company, which has paid-up capital of Rs 141.9 million, was required to raise paid-up capital to Rs 250 million. That means the promoters had to inject Rs 108.1 million into the troubled institution.
NRB Spokesperson Manmohan Kumar Shrestha confirmed that they have rejected the bank´s plan to revive NB Insurance. “The bank had come up with plan to revive the insurance company. But we rejected the plan outright, as the directive does not allow banks to hold more than 10 percent stake in any other company," he added.
Officials of NB Insurance was involved in misappropriation of a staggering Rs 59 million -- more than half of the company´s capital of Rs 100 million -- on the pretext of paying rent for a building, which, they claimed, was taken on rent for 15 years.
Meanwhile, Nepal Credit and Commerce (NCC) Bank, another promoter of NB Insurance, is also struggling to offload its 10 percent (146,000 units) shares that it holds in the insurance company. "We have been trying to sell our shares in NB Insurance through auction as the investment in the insurance company is affecting our capital adequacy," Ramesh Aryal, spokesperson of NCC Bank, said. "We are going for another round of auction as we didn´t receive sufficient bids in our previous bidding."
NB Insurance´s share was last traded at Rs 80 per unit before Nepal Stock Exchange (Nepse) suspended trading in December last year.
source: republica,28 oct 2014
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Nepal Bangladesh (NB) Bank Ltd has decided to divest its stakes in NB Insurance Company Ltd through open auction after Nepal Rastra Bank (NRB) rejected the bank´s plan to revive the non-life insurance company.
NB Bank issued a public notice on Monday to sell 642,500 units of promoter´s shares, 45 percent stake, in NB Insurance through open auction.
The bank was required to offload its holding in NB Insurance as the central bank does not allow commercial banks to hold more than 10 percent stakes in other institution.
“Since the central regulatory bank has already issued directive, limiting a bank´s holding in other company, we have decided to divest our shares at the NB Insurance,” NB Bank CEO Gyanendra Prasad Dhungana told Republica. He, however, said that the bank was yet to decide on whether to retain 10 percent holding or divest all stakes.
"We have invited bids for auction of all our promoters´ shares. But we have put a clause that says the bank can take decision on complete or partial bids," Dhungana said, adding, "That will depend on the type of investors who approach us to buy shares."
NB Insurance is promoted by NB Group which also has stakes in Nepal Bangladesh Bank, Nepal Credit & Commerce Bank, Harisiddhi Brick and Tiles Factory and National Hydropower Company.
The bank´s decision to offload its holding in NB Insurance has pushed the possibility of immediate revival of the troubled insurance company into uncertainty. Insurance Board (IB), the insurance sector regulator, has directed officials of NB Insurance to come up with revival plan by mid-November.
According to IB officials, NB Bank had told the insurance regulator that it plans to develop NB Insurance as its subsidiary company. "The bank´s officials had assured us that they would come up with a plan to revive the troubled insurance company as its subsidiary. We are positive about the proposal," Raju Raman Poudel, director of IB, told Republica. "However, it seems that the bank has retracted from its pledge."
IB had stopped the NBB Insurance from making any transaction in December last year after the troubled company failed to abide by the regulator´s directives. Officials of the company were involved in different irregularities like flouting reinsurance guidelines, misusing premium amount collected from public, depositing its money at a finance company in an unauthorized manner, and embezzling fund while taking office building on lease.
The due diligence audit report conducted by the IB had showed that the company has far higher liabilities than the assets. According to IB officials, the company, which has paid-up capital of Rs 141.9 million, was required to raise paid-up capital to Rs 250 million. That means the promoters had to inject Rs 108.1 million into the troubled institution.
NRB Spokesperson Manmohan Kumar Shrestha confirmed that they have rejected the bank´s plan to revive NB Insurance. “The bank had come up with plan to revive the insurance company. But we rejected the plan outright, as the directive does not allow banks to hold more than 10 percent stake in any other company," he added.
Officials of NB Insurance was involved in misappropriation of a staggering Rs 59 million -- more than half of the company´s capital of Rs 100 million -- on the pretext of paying rent for a building, which, they claimed, was taken on rent for 15 years.
Meanwhile, Nepal Credit and Commerce (NCC) Bank, another promoter of NB Insurance, is also struggling to offload its 10 percent (146,000 units) shares that it holds in the insurance company. "We have been trying to sell our shares in NB Insurance through auction as the investment in the insurance company is affecting our capital adequacy," Ramesh Aryal, spokesperson of NCC Bank, said. "We are going for another round of auction as we didn´t receive sufficient bids in our previous bidding."
NB Insurance´s share was last traded at Rs 80 per unit before Nepal Stock Exchange (Nepse) suspended trading in December last year.
source: republica,28 oct 2014
LINK
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