Central bank clears NB Bank’s second installment, ICFC stake to rise to 42% soon

ShareSansar, April 29:

Here’s good news for the shareholders of Nepal Bangladesh Bank Limited. The central bank has finally approved the second installment from ICFC Bank of Bangladesh to buy 8.40 lakh units of promoter shares of NBB.

“The central bank yesterday cleared the final hurdle for the ICFC to release the second installment,” NB Bank’s chief executive officer Gyanendra Prasad Dhungana told ShareSansar today, adding that with this ICFC’s stake in the bank will soon rise to 42 percent from 37.46 percent as of now.

He further informed that once the second installment arrives, NB Bank’s profit can shoot up to approximately Rs 80 crore by the end of the current fiscal year 2070/71, up from just Rs 59.07 crore net profit it posted in the last fiscal year.

“We expect the third installment from ICFC only in the next fiscal year,” he added. “It will also be at the rate of Rs 260 per unit.”

As per the agreement between the central bank and ICFC, the Bangladeshi bank is to buy 51 percent stake in NB bank.

Q3 net profit approx. Rs 40 crore, NPL less than 2%

CEO Dhungana also informed that the bank will report approximately Rs 40 crore net profit in the third quarter report, which is expected within a week.

That will be a net profit rise of nearly 30 percent since NB Bank had posted net profit of Rs 31.08 percent in the corresponding quarter of the last fiscal year 2069/70.

Dhungana explained that the net profit was fuelled by core business as NB Bank has managed to mobilize better deposit and loan amounts.

“Our non-performing loan has also dropped to below 2 percent,” he added. NB Bank’s NPL had stood at a whopping 3.50 percent at the end of the corresponding quarter of the last fiscal.

AGM by July first week at the latest

NB Bank top executive also expressed confidence that the ongoing share ownership transfer row will be settled within the next few days, so that they could hold the stalled Annual General Meeting “within the first week of July at the latest”.

“We are meeting officials from NEPSE today to follow up on the matter,” he said, adding that Nirmal Pradhan and the party would do well to settle the problem immediately.

He also clarified that the dividend pledged by the NBB to the shareholders will not be revised or affected due to the row when the AGM is rescheduled.

Company Secretary of the bank Dhiraj Raj Subedi said that they have been informally informed that Pradhan and party were buying shares in the secondary market to compensate the victims.

“Once we get the green signal from the NEPSE to announce the AGM, we will do so immediately,” he said. “We are fully prepared to hold the AGM, and are only looking for the approval from the NEPSE.”

SEBON official, too, believes that the problem will be sorted out with the first or the second week of May at the latest.

“We suspended the ban placed on trading in shares held by Nirmal Pradhan and company on April 2 after they pledged to compensate the victimized share investors by within a month. We hope that they will live up to their words,” says SEBON Spokesperson Niraj Giri. “If they fail to settle the problem within the deadline then we will be compelled to initiate action against them.”

But he added that the SEBON believes Pradhan and party will be able to meet the deadline, which expires on May 1.

Giri further informed that SEBON is planning to settle the problem within Baisakh (mid-May) since further delay would lead to further complications such as victimization of thousands of shareholders as well as affecting important decisions of NB Bank to be taken by the AGM.

“The problem has to be settled within Baisakh,” he said. “We are planning our moves accordingly.”

NEPSE officials also maintain that Pradhan can easily settle the problem by transferring NB Bank shares to the victims, and that a month period was more than enough to do so.

Back in the first week of March, SEBON has directed NEPSE to stop trading shares held by Nirmal Pradhan, his wife and three sons, and his relatives Laxmi Bahadur Shrestha, Shankar Kumar Shrestha and Nabin Shrestha along with the scrips registered in the names of three of his share trading companies — Rajdhani Investment, Bagmati Investment and Lhotse Investment.

The regulator issued the directive after investing the complications stemming from the share ownership transfer row of NBB and National Hydropower Limited (NHPC) owing to the dispute between the Nirmal Pradhan and NB Groups.

Due to the dispute between the two groups, NB Bank has been forced to put off its Annual General Meeting slated for March 11. Besides announcing the book closure on February 17 for the AGM, the bank had even announced adjusted base of Rs 552.

The AGM was expected to endorse 10 percent bonus shares and 7.79 percent cash dividend from the net profit the commercial bank earned in the last fiscal year 2069/70, besides electing some directors.

The share ownership transfer complication has led to possible loss worth millions of rupees for more than 1,000 investors who bought some shares of the bank unknowingly.

Genesis of the row

It all started after Pradhan and Shrestha obtained 220,000 units of ordinary shares from Laxmi Bahadur Shrestha, a promoter of NB Group and a former NB Bank director, for a loan.

While transferring the ownership of the shares, Laxmi Bahadur had made them sign another agreement, which barred them from selling those shares.  However, the duo went on to seek marginal lending by placing the same shares as collateral at Narayani National Finance.

Then they failed to repay the loan and the finance company sold the shares in the secondary market.

Laxmi Bahadur then filed a law suit against Pradhan and Shrestha at the Kathmandu District Court against the sale of the shares, and the court ruled in his favor asking the concerned authorities to stop transferring ownership of shares sold by the finance company.

To pressurize the concerned parties to settle the festering share transfer row, brokers had stopped trading shares held by Pradhan and company as well as that of NB Bank for some time in February.