BoK ‘seeks’ merger with ILFC, Nepal Express and Shree Investment

ShareSansar, March 25:

Bank of Kathmandu is preparing a MoU for to complete its merger with three finance companies within four months,  according to the sources privy of the development.

The BFIs to merge with BoK are International Leashing and Finance Company (ILFC), Nepal Express Finance and Shree Investment and Finance Company.

Formally, however, the bank officials would not confirm or refute the news.

The Board of Directors has asked the bank management to finalize the deal by mid July.

According to sources, BoK is seeking the merger mainly to set aside a huge chuck of money for provision following the Melamchi row.

The BoK had issued guarantee, risk losing US $6.62 million and Euro 1.4 million to pay as counter guarantee amount to MWSDB after their client — China Railway 15 Bureau Group Corporation — failed to complete the construction of the tunnel of MWSDB.

The reason the four BFIs are seeking merger as they have many common promoters.

BoK’s paid-up capital stands at 1.92 arba, ILFC has paid-up of Rs 2 arba while Nepal Express and Investment Finanace’s paid-up stand at Rs 19.79 crore and Rs 17.6 crore respectively.

Among the four BFIs, ILFC has the highest non-performing loan of 4.45 while the NPL of the rest is not significant and they have been offering impressive dividend from the very beginning.

A few months back ILFC and Shree Investment had started the merger process with Bok.

The BFIs decided to formally seek the central bank’s approval for the merger as they have more or less completed all the internal procedures for the merger in January, according to some reports.

According to sources, the three BFIs have also agreed on the swap ratio: 50 percent for ILFC and 90 percent for Shree Investment. 

Earlier ILFC was reported to have been working for a merger with Grand Bank.