Merged Financial Institutions eye more merger
KATHMANDU, FEB 21 -
Amid a drive from banks and financial institutions (BFIs) for consolidation, two financial institutions (FIs) that have recently concluded their merger, are again eyeing another merger. H&B Development Bank and Narayani National Finance are in serious discussions for another tie-up with other FIs.
Central bank officials said H&B is in talks with Vibor Bikas Bank for the merger. One of the directors in the H&B’s board also acknowledged that they are exploring every merger possibility with Vibor. “We are seeking to upgrade our institution to a commercial bank and we hope that a successful merger will help us gain that status,” the director said. “Apart from the merger with Vibor, we are exploring ways to rope in foreign investors.”
For Vibor that is still struggling with liquidity, the proposed merger makes good sense. It is on the verge of completing its merger with Bhajuratna Saving and Finance. Vibor is currently waiting for Licence of Intent (LOI) from the Nepal Rastra Bank (NRB) to start the final merger process with Bhajuratna. H&B Development Bank itself is a merged entity formed six months ago following a tie-up between Birgunj Finance Limited and Himchuli Bikas Bank.
Vibor officials said a successful merger with H&B has a lot of synergy. “We are very strong on fixed asset base, while we are in the weaker side when it comes to liquid asset,” the officials said. “In the contrary, H&B is good in terms of liquid asset and a little weak in terms of fixed asset. It is indeed an ideal condition for both of us to merge.”
The H&B board is all set to meet the Governor to talk the issue out. If the central bank agrees to upgrade it, they have agreed to bring foreign investors too. NRB sources said that if the capital size increases adequately, they are positive about the upgradtion too. However, they did not say what the size of the ‘adequate capital’ would be.
Narayani National Finance Limited (NNFL), which was the first example of a merger in the country, is also seeking a suitable partner for merger again. NNFL was formed in 2009 after the merger between two finance companies—Narayani Finance Limited and National Finance Limited.
NNFL CEO Naresh Singh Bohra said they are opting for the merger to boost their business. The AGM of the finance company held in mid-January had mandated the board to go for a merger.
“We are looking for regional level development banks that have presence in areas where we don’t have our footprint so that we can expand both in terms of capital and business,”
Source: Kantipur
