Is NCC Bank merger on cards?

ShareSansar, June 24

In an interview with Arthik Abhiyan, Nepal Credit and Commerce Bank (NCC) CEO Amrit Charan Shrestha has hinted that the bank might go for a merger in the near future.  

“Despite the fact that we have enough capital to operate on our own, we are interested to enter a merger because of the encouraging initiatives brought forward by Nepal Rastra Bank. In addition, we are seeing that at present shareholders of many companies are not purchasing rights shares. That is why merger has become the best way to increase the capital,” Shrestha tells the newspaper.  

He has indicated that NCC Bank is looking for a strong financial institution to merge with. “We are not planning a merger with commercial banks as of now,” Shrestha says in the interview.

Shrestha has informed the paper that the bank’s AGM in Chaitra has in principle agreed to allow it to enter a merger.  

According to Shrestha, a merger between two A category banks is somewhat difficult. The only example of an A category bank merging with another A category bank to date is that between NIC and Bank of Asia. “The most complicated thing in this process is managing the staff reorganization,” says Shrestha.

In explaining the short fall in the bank’s paid-up capital even after issuing bonus shares recently, Shrestha has said that though the bank still falls short of the obligation to maintain a paid up capital of Rs 2 arba set by Nepal Rastra Bank, old banks are allowed to operate with a paid up capital that is 80% of that figure. “We can show the remaining capital from our reserve,” Shrestha says.

NCC Bank’s paid up capital currently stands at Rs 1 arba 47 crore.

Projecting a positive outlook for the bank, Shrestha has said that the paid up capital of the bank will reach Rs 1 arba 60 crore from the profit it will earn by the end of this fiscal year.

“We are planning to provide 15 to 20 percent bonus shares following this year’s profit,” says Shrestha.