Two commercial banks -- Machhapuchchhre Bank Limited (MBL) and Janata Bank Ltd (JBL) -- have decided to go for a merger.Tulasi Ram Gautam, CEO of MBL, confirmed the signing of preliminary Memorandum of Understanding (MoU) for merger. “The two banks have signed preliminary MoU to move forward for the amalgamation process as per the decision of their respective boards. However, there are still many issues to be finalized,” said Gautam.
Chairpersons of the two banks signed the preliminary MoU on behalf of their respective institutions on Tuesday to meet the new capital requirement set by the central bank.
The new provision requires commercial banks to increase their paid-up capital by four times to Rs 8 billion within two years. Likewise, development banks and finance companies are also required to increase their paid-up capital by multiple times.
If the merger process sails smoothly, it would be the third merger of commercial banks. Earlier, NIC Bank and Bank of Asia had merged to become NIC Asia, while Commerz and Trust Bank had merged with Global IME to become ‘Global IME Bank Ltd’. Likewise, Prabhu Bank Ltd is in the process of acquiring Grand Bank Ltd
MBL was established in 1998. Non Resident Nepalis (NRNs), including Upendra Mahato, who is also the former president of Non Resident Nepali Association, are the major promoters of the bank. JBL is one of the youngest commercial banks that come into operation in 2010.The merging parties have agreed to name the merged entity as ‘Machhapuchchhre Bank Ltd’.
“The merger process will be completed as soon as possible,” Kumar Lamsal, CEO of JBL, said.
Similarly, Gautam told Republica that the two banks have tentatively agreed to fix the share swap ratio of MBL and JBL at 121:82. This means 121 units of MBL shares will be equal to 82 units of JBL shares in the merged entity. However, the exact swap ratio will be fixed following the due diligence audit of the two banks.
The merged entity will have paid-up capital of around Rs 6 billion. MBL has already issued 5:1 rights shares which will raise its paid-up capital to Rs 3.33 billion. The bank is also planning to issue bonus shares worth Rs 480 million. Similarly, JBL has paid-up capital of Rs 2.06 billion. According to a source at the bank, JBL is planning to issue bonus shares worth Rs 120 million.
“We will have paid-up capital of Rs 5.99 billion following the merger. Bonus and rights issue can be floated next year to raise the paid-up capital to the regulatory requirement of Rs 8 billion,” Gautam told Republica.
He said the two banks will sign a comprehensive MoU, form joint merger committee, seek the Letter of Intent (LoI) from NRB, harmonize the ranking and finalization of the staff members, endorse the merger decision from their respective AGMs, and start operation as a merged entity. “If everything goes as planned, we will complete the merger process soon,” added Gautam.
The two banks have become the first partners to announce merger after the NRB set new capital floor for bank and financial institutions (BFIs) through the Monetary Policy for Fiscal Year 2015/16
Following the decision to undergo merger, Nepal Stock Exchange has suspended trading of shares of both the banks.
source: republica, 23 sep 2015
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Chairpersons of the two banks signed the preliminary MoU on behalf of their respective institutions on Tuesday to meet the new capital requirement set by the central bank.
The new provision requires commercial banks to increase their paid-up capital by four times to Rs 8 billion within two years. Likewise, development banks and finance companies are also required to increase their paid-up capital by multiple times.
If the merger process sails smoothly, it would be the third merger of commercial banks. Earlier, NIC Bank and Bank of Asia had merged to become NIC Asia, while Commerz and Trust Bank had merged with Global IME to become ‘Global IME Bank Ltd’. Likewise, Prabhu Bank Ltd is in the process of acquiring Grand Bank Ltd
MBL was established in 1998. Non Resident Nepalis (NRNs), including Upendra Mahato, who is also the former president of Non Resident Nepali Association, are the major promoters of the bank. JBL is one of the youngest commercial banks that come into operation in 2010.The merging parties have agreed to name the merged entity as ‘Machhapuchchhre Bank Ltd’.
“The merger process will be completed as soon as possible,” Kumar Lamsal, CEO of JBL, said.
Similarly, Gautam told Republica that the two banks have tentatively agreed to fix the share swap ratio of MBL and JBL at 121:82. This means 121 units of MBL shares will be equal to 82 units of JBL shares in the merged entity. However, the exact swap ratio will be fixed following the due diligence audit of the two banks.
The merged entity will have paid-up capital of around Rs 6 billion. MBL has already issued 5:1 rights shares which will raise its paid-up capital to Rs 3.33 billion. The bank is also planning to issue bonus shares worth Rs 480 million. Similarly, JBL has paid-up capital of Rs 2.06 billion. According to a source at the bank, JBL is planning to issue bonus shares worth Rs 120 million.
“We will have paid-up capital of Rs 5.99 billion following the merger. Bonus and rights issue can be floated next year to raise the paid-up capital to the regulatory requirement of Rs 8 billion,” Gautam told Republica.
He said the two banks will sign a comprehensive MoU, form joint merger committee, seek the Letter of Intent (LoI) from NRB, harmonize the ranking and finalization of the staff members, endorse the merger decision from their respective AGMs, and start operation as a merged entity. “If everything goes as planned, we will complete the merger process soon,” added Gautam.
The two banks have become the first partners to announce merger after the NRB set new capital floor for bank and financial institutions (BFIs) through the Monetary Policy for Fiscal Year 2015/16
Following the decision to undergo merger, Nepal Stock Exchange has suspended trading of shares of both the banks.
source: republica, 23 sep 2015
LINK
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