Banks yet to end cross holdings despite NRB fiat
KATHMANDU, AUG 10 -
A number of commercial banks have not complied with the directive of Nepal Rastra Bank (NRB) to end their cross holdings, meaning offloading their shares of other listed companies, although six years have passed since it was issued.
Government-owned Rastriya Banijya Bank (RBB) and Nepal Bank Limited (NBL), in which the government has a majority stake, are among the banks that have not fulfilled the central bank’s instruction. RBB owns 3.61 million promoter shares of Nepal Investment Bank while NBL holds 3,000 promoter shares of Nepal Industrial Development Corporation (NIDC).
Among private sector banks, Nepal Credit and Commerce (NCC) Bank holds 92,093 shares of NBL which it said it has not been able to sell as they have been de-listed by the Nepal Stock Exchange.
The central bank decided to end cross holdings as they allow cross interest and discourage a competitive environment.
NRB has been extending the deadline to end cross holdings year after year. It is planning to lengthen the time limit again after the latest one expired in mid-July. “We are planning to extend the deadline by three months,” said NRB spokesperson Bhaskarmani Gyawali. “It is not possible to end cross holdings immediately as the stock market is not performing well.”
RBB’s chairman and managing director Ram Prasad Adhikari said that his bank would not take any immediate steps to end cross holdings as stock prices have tumbled. Shares of Nepal Investment Bank Limited (NIBL) have plunged to Rs 500 per unit from a high of Rs 1,900 two years ago.
RBB has been trying to sell its shares of NIBL, but without much enthusiasm. Two years ago, it fixed the price at Rs 1,068 which the Securities Board of Nepal (Sebon) refused to entertain. The stock market regulator asked NIBL to revise the price downward but it refused, resulting in a stalemate.
The central bank has not insisted that government-owned banks sell their shares of other listed companies as it would mean massive losses to the government amid the slump in the stock market. “We have written to NRB seeking an extension of the deadline by one more year,” said Adhikari.
Likewise, NBL officials said they had not been able to sell shares of NIDC for lack of takers. “Time and again we have called for sealed tenders to sell those shares, but we are yet to get buyers quoting a satisfactory price,” said NBL public relations officer Ashwin Pudasaini.
Similarly, NCC Bank has been forced to keep its shares of NBL as they have been delisted. “Nobody is showing interest in buying NBL shares as they have been delisted by the stock exchange,” said NCC Bank’s general manager Gyanendra Prasad Dhungana.
“In such a situation, ownership of the shares cannot be transferred.” The bank had sold 95,000 shares of NBL in the past, but transfer of ownership is yet to be made.
Source: Kantipur
A number of commercial banks have not complied with the directive of Nepal Rastra Bank (NRB) to end their cross holdings, meaning offloading their shares of other listed companies, although six years have passed since it was issued.
Government-owned Rastriya Banijya Bank (RBB) and Nepal Bank Limited (NBL), in which the government has a majority stake, are among the banks that have not fulfilled the central bank’s instruction. RBB owns 3.61 million promoter shares of Nepal Investment Bank while NBL holds 3,000 promoter shares of Nepal Industrial Development Corporation (NIDC).
Among private sector banks, Nepal Credit and Commerce (NCC) Bank holds 92,093 shares of NBL which it said it has not been able to sell as they have been de-listed by the Nepal Stock Exchange.
The central bank decided to end cross holdings as they allow cross interest and discourage a competitive environment.
NRB has been extending the deadline to end cross holdings year after year. It is planning to lengthen the time limit again after the latest one expired in mid-July. “We are planning to extend the deadline by three months,” said NRB spokesperson Bhaskarmani Gyawali. “It is not possible to end cross holdings immediately as the stock market is not performing well.”
RBB’s chairman and managing director Ram Prasad Adhikari said that his bank would not take any immediate steps to end cross holdings as stock prices have tumbled. Shares of Nepal Investment Bank Limited (NIBL) have plunged to Rs 500 per unit from a high of Rs 1,900 two years ago.
RBB has been trying to sell its shares of NIBL, but without much enthusiasm. Two years ago, it fixed the price at Rs 1,068 which the Securities Board of Nepal (Sebon) refused to entertain. The stock market regulator asked NIBL to revise the price downward but it refused, resulting in a stalemate.
The central bank has not insisted that government-owned banks sell their shares of other listed companies as it would mean massive losses to the government amid the slump in the stock market. “We have written to NRB seeking an extension of the deadline by one more year,” said Adhikari.
Likewise, NBL officials said they had not been able to sell shares of NIDC for lack of takers. “Time and again we have called for sealed tenders to sell those shares, but we are yet to get buyers quoting a satisfactory price,” said NBL public relations officer Ashwin Pudasaini.
Similarly, NCC Bank has been forced to keep its shares of NBL as they have been delisted. “Nobody is showing interest in buying NBL shares as they have been delisted by the stock exchange,” said NCC Bank’s general manager Gyanendra Prasad Dhungana.
“In such a situation, ownership of the shares cannot be transferred.” The bank had sold 95,000 shares of NBL in the past, but transfer of ownership is yet to be made.
Source: Kantipur
