AGMs of Manakamana, Valley approve merger with ID, Yeti

KATHMANDU, June 25:

Shareholders of Manakamana Development Bank have cleared the deck for the financial institution´s merger with Infrastructure Development (ID) Bank, Yeti Finance and Valley Finance Limited.

The annual general meeting of category ´B´ financial institution held on Monday extended green signal to the consolidation process initiated with the target of creating a commercial bank, a person familiar with the matter told Republica.

Also on Monday, the annual general meeting of Valley Finance approved the financial institution´s planned merger with the three institutions.
“Once the special general meetings of Yeti Finance and ID Bank scheduled for Tuesday and June 27, respectively, endorse the merger process, we will ask Nepal Rastra Bank (NRB) to give us final permission to complete the merger process,” the source said.

After the merger process wraps up, the new unit will have a paid-up capital of approximately Rs 2.2 billion, which is enough for creation of a commercial bank.
But since the banking sector regulator does not only take capital into account while upgrading financial institutions into commercial banks, the banking institutions are not sure whether the merged unit will be able to register itself as category ´A´ financial institution.

“Our plan is to convert the merged unit into a commercial bank, but we are keeping our fingers crossed as it is up to central bank to make a decision in this regard,” a high-ranking official of one of the financial institutions told Republica on condition of anonymity.

Although the four financial institutions have not decided on the name of the merged unit, they have reached consensus on constituting a nine-member board of directors, which will be led by a representative of Manakamana Development Bank.
Sources also told Republica that the four financial institutions have also agreed on letting the current CEO of Manakamana to head the management of the merged unit.

Source: Republica