More Financial Institution mergers ahead
KATHMANDU, JUN 16 -
The country’s financial institutions (FIs), especially development banks and finance companies, are in the grip of merger fever.
Amid severe liquidity crunch spurred by over loan exposure to the realty sector, an increasing number of FIs are holding bilateral and multilateral talks for possible unification. The introduction of merger bylaws with regulatory relaxation for the merged entity has also encouraged mergers of FIs.
Nepal Finance Companies Association President and CMB Finance CEO Rajendra Man Shakya said as FIs shareholders are not interested in further investing, merger is the only option for them to grow. “The current crisis has forced FIs to opt for merger,” he said, adding that he is also looking for a right financial institution to merge.
On Tuesday, two FI—-Birgunj Finance Limited (BFL) and Himchuli Bikas Bank (HBB—-completed their merger process to become H&B Development Bank. This is the first merger case after the Nepal Rastra Bank (NRB) introduced merger bylaws.
The central bank is itself directing FIs to go for merger. Vibor Bikas Bank, which needed NRB’s loan of Rs 500 million after its health deteriorated due to liquidity crunch, has been directed to go for merger. FIs officials admit that they are forced to go for merger due to unfavourable banking environment.
Of late, finance companies are showing more interest in merger. Kuber Merchant Finance General Manager Raj Kumar Shrestha says his company is holding talks with three to four other finance companies and development banks in this regard. “We’re in merger talks with some likeminded companies including the World Merchant Finance,” said Shrestha. “The idea is to set up a bigger institution with a large capital base.”
Another FI that is exploring the merger possibility is Universal Finance Limited. Managing Director Narayan Man Rajbhandari says his company will pursue merger seriously after the end of this fiscal year. “We’ve initiated discussions with a few FIs,” said Rajbhandari. “But, we are in the initial stage.”
Cyrstal Finance and Narayani Bikas Bank are also vying for a merger. According to Crystal CEO Ram Prasad Hada, the company’s annual general meeting has already passed the merger proposal. “We have talked with Narayani on merger,” said Hada. “Our plan is to end the merger process by mid-July.”
Not only are finance companies, development banks also seriously considering merger. While Kasthamandap Development Bank and Shikhar Finance are on a merger course, Manakamana Development Bank is looking for a right partner. Shikhar’s special general meeting on June 13 decided to merge with Kasthamandap. The two FIs have already informed NRB about their plans.
Manakamana CEO Bhusan Rana says his bank is engaged with few other development banks in this connection. “Our plan is to merge three to four development banks to make the capital base of Rs 2 billion,” said Rana. “And, in the next phase, we’ll upgrade to commercial bank.”
Source: Kantipur
The country’s financial institutions (FIs), especially development banks and finance companies, are in the grip of merger fever.
Amid severe liquidity crunch spurred by over loan exposure to the realty sector, an increasing number of FIs are holding bilateral and multilateral talks for possible unification. The introduction of merger bylaws with regulatory relaxation for the merged entity has also encouraged mergers of FIs.
Nepal Finance Companies Association President and CMB Finance CEO Rajendra Man Shakya said as FIs shareholders are not interested in further investing, merger is the only option for them to grow. “The current crisis has forced FIs to opt for merger,” he said, adding that he is also looking for a right financial institution to merge.
On Tuesday, two FI—-Birgunj Finance Limited (BFL) and Himchuli Bikas Bank (HBB—-completed their merger process to become H&B Development Bank. This is the first merger case after the Nepal Rastra Bank (NRB) introduced merger bylaws.
The central bank is itself directing FIs to go for merger. Vibor Bikas Bank, which needed NRB’s loan of Rs 500 million after its health deteriorated due to liquidity crunch, has been directed to go for merger. FIs officials admit that they are forced to go for merger due to unfavourable banking environment.
Of late, finance companies are showing more interest in merger. Kuber Merchant Finance General Manager Raj Kumar Shrestha says his company is holding talks with three to four other finance companies and development banks in this regard. “We’re in merger talks with some likeminded companies including the World Merchant Finance,” said Shrestha. “The idea is to set up a bigger institution with a large capital base.”
Another FI that is exploring the merger possibility is Universal Finance Limited. Managing Director Narayan Man Rajbhandari says his company will pursue merger seriously after the end of this fiscal year. “We’ve initiated discussions with a few FIs,” said Rajbhandari. “But, we are in the initial stage.”
Cyrstal Finance and Narayani Bikas Bank are also vying for a merger. According to Crystal CEO Ram Prasad Hada, the company’s annual general meeting has already passed the merger proposal. “We have talked with Narayani on merger,” said Hada. “Our plan is to end the merger process by mid-July.”
Not only are finance companies, development banks also seriously considering merger. While Kasthamandap Development Bank and Shikhar Finance are on a merger course, Manakamana Development Bank is looking for a right partner. Shikhar’s special general meeting on June 13 decided to merge with Kasthamandap. The two FIs have already informed NRB about their plans.
Manakamana CEO Bhusan Rana says his bank is engaged with few other development banks in this connection. “Our plan is to merge three to four development banks to make the capital base of Rs 2 billion,” said Rana. “And, in the next phase, we’ll upgrade to commercial bank.”
Source: Kantipur
