See how much capital commercial banks need to increase after their mergers and acquisitions
Fri, Dec 30, 2016 1:06 PM on Latest, Exclusive, Featured, Stock Market,
There are altogether 11 commercial banks that are undergoing mergers and acquisitions with development banks and finance companies. Other 17 commercial banks that are not going under mergers will have to increase their capital by issuing dividends and rights. Standard Chartered Bank will have to increase its capital by almost 100% after it issues its FPO. On the other hand, NMB Bank will have to issue around 5-9% after floating its FPO.
Prabhu Bank and Bank of Kathmandu Lumbini have completed their mergers and will increase their capital to Rs. 8 arba by issuing bonus and right shares. For 11 commercial banks that are undergoing mergers and acquisitions, ShareSansar has compiled a detailed list with their current paid up capital, capitals of the companies they are acquiring, and analyzed by how much they would need to increase the capital in FY 2073/74 to reach NRB’s minimum requirement.
If it does not issue any bonus from its profits in 2072/73, it will have to increase its capital by around 44% in 2073/74.
The bank will have to increase their capital by 72% to meet NRB’s minimum requirement. This value will be lower if they endorse any dividend this year.
Sunrise Bank had offered 33.33% bonus shares for the year 2072/73 and is going to issue 30% right share on the final paid up. After acquiring NIDC Capital Markets, the paid up capital of the merged entity is going to be Rs. 7.04 arba. However, this capital does not include the bonus amount NIDC Capital Markets might announce on its annual AGM.
Similarly, Ace Development Bank will be acquired by Nepal Investment Bank in the ratio 100:41. The capital of the merged entity will be Rs 9.2 arba. Global IME Bank will also comfortably reach over Rs. 8 arba in capital after acquiring Pacific Development Bank and Reliable Development Bank.
Janata Bank Nepal is merging with Triveni Bikas Bank. Although the swap ratio has not been declared, it is likely to be at 1:1. After their individual issues are allotted, their paid up capital will reach Rs. 4.47 arba. Next year, their paid up capital should be increased by around 78% to reach NRB’s minimum requirement of Rs. 8 arba.
After acquiring Biratlaxmi Bikas Bank and Country Development Bank, the merged entity will need to increase its paid up capital by Rs. 121.4 Crores. The swap ratio for both the development banks was assumed to be at 80% for this analysis.
Laxmi Bank is yet to propose any dividend from its profits in FY 2072/73. After acquiring PRDBL in the ratio 100:50, its paid up capital will reach Rs. 3.15 arba. To meet NRB’s requirement of Rs. 4 arba by this FY 2072/73, Laxmi Bank will likely issue stock dividend around 20-25%. The merged entity will then further issue 100% right share. This way, their paid up capital will increase to Rs. 6.31 arba.
Next year, they will have to further issue around 27% to reach Rs. 8 arba.
Century Commercial Bank is acquiring two development banks: Innovative Development Bank and Araniko Development Bank. Swap ratio of 100:80:80 has been assumed for this analysis. This way, the merged entity will have to issue more than 86% of their capital to reach NRB’s requirement. However, they will have reached the minimum paid up capital required by this FY 2072/73 (Rs. 4 arba).
Similarly, Civil Bank’s paid up is likely to reach around Rs. 3.55 arba after acquiring Hama Merchant and Finance, and Unique Finance. Civil Bank has not announced any stock dividend yet. Its EPS in 2072/73 stood at just Rs. 10.75 per share while net worth at Rs.117.31.
Civil Bank will have to issue more than 125% to reach the minimum capital requirement by next year, or it risks corrective actions from NRB.
Kumari Bank acquiring three development banks and one finance company
Kumari Bank is acquiring Kasthamandap Development Bank, Kakrebihar Bikas Bank, Mahakali Bikas Bank and Paschimanchal Finance. The swap ratio has not been fixed yet, however, we have assumed 90%. Kumari Bank has declared 50% right share in this fiscal year 2073/74 but has not announced any bonus to this date. Final paid up of the bank will only be known after the conduction of AGM.If it does not issue any bonus from its profits in 2072/73, it will have to increase its capital by around 44% in 2073/74.
Nepal Credit and Commerce Bank merging with 4 development banks
NCC Bank is commencing joint transaction with other 4 development banks from January 1, 2017. It had received final approval from NRB on Mangsir 8. Infrastructure Development Bank, Apex Development Bank, Supreme Development Bank and International Development Bank are being acquired by NCC Bank. All 5 of the banks are yet to declare any dividend from their profits in 2072/73. However, APEX still has negative reserve, so it is unlikely to propose any dividend this year.
The bank will have to increase their capital by 72% to meet NRB’s minimum requirement. This value will be lower if they endorse any dividend this year.
Swap ratio for NIDC Capital Markets, Ace Development Bank, Triveni Bikas Bank and Bagmati Development Bank has been declared
Sunrise Bank had offered 33.33% bonus shares for the year 2072/73 and is going to issue 30% right share on the final paid up. After acquiring NIDC Capital Markets, the paid up capital of the merged entity is going to be Rs. 7.04 arba. However, this capital does not include the bonus amount NIDC Capital Markets might announce on its annual AGM.
Similarly, Ace Development Bank will be acquired by Nepal Investment Bank in the ratio 100:41. The capital of the merged entity will be Rs 9.2 arba. Global IME Bank will also comfortably reach over Rs. 8 arba in capital after acquiring Pacific Development Bank and Reliable Development Bank.
Janata Bank Nepal is merging with Triveni Bikas Bank. Although the swap ratio has not been declared, it is likely to be at 1:1. After their individual issues are allotted, their paid up capital will reach Rs. 4.47 arba. Next year, their paid up capital should be increased by around 78% to reach NRB’s minimum requirement of Rs. 8 arba.
Prime Commercial Bank will need to increase its capital by around 18%
After acquiring Biratlaxmi Bikas Bank and Country Development Bank, the merged entity will need to increase its paid up capital by Rs. 121.4 Crores. The swap ratio for both the development banks was assumed to be at 80% for this analysis.
Laxmi Bank acquiring Professional Diyalo Development Bank and issuing 100% right share
Laxmi Bank is yet to propose any dividend from its profits in FY 2072/73. After acquiring PRDBL in the ratio 100:50, its paid up capital will reach Rs. 3.15 arba. To meet NRB’s requirement of Rs. 4 arba by this FY 2072/73, Laxmi Bank will likely issue stock dividend around 20-25%. The merged entity will then further issue 100% right share. This way, their paid up capital will increase to Rs. 6.31 arba.
Next year, they will have to further issue around 27% to reach Rs. 8 arba.
Century Commercial Bank and Civil Bank will have to issue the highest amount of shares
Century Commercial Bank is acquiring two development banks: Innovative Development Bank and Araniko Development Bank. Swap ratio of 100:80:80 has been assumed for this analysis. This way, the merged entity will have to issue more than 86% of their capital to reach NRB’s requirement. However, they will have reached the minimum paid up capital required by this FY 2072/73 (Rs. 4 arba).
Similarly, Civil Bank’s paid up is likely to reach around Rs. 3.55 arba after acquiring Hama Merchant and Finance, and Unique Finance. Civil Bank has not announced any stock dividend yet. Its EPS in 2072/73 stood at just Rs. 10.75 per share while net worth at Rs.117.31.
Civil Bank will have to issue more than 125% to reach the minimum capital requirement by next year, or it risks corrective actions from NRB.
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