NBB share sale unlikely soon

KATHMANDU, JUN 11 -

The proposed sale of shares by Nepali promoters of Nepal Bangladesh Bank (NBB) to one of their Bangladeshi partners may not materialise any time soon as the Nepal Rastra Bank (NRB) is yet to take a decision on the matter.

The Bank and Financial Institution Act (BAFIA) bars promoter directors from selling their shares within one year after their exit from banks and financial institutions (BFIs) concerned. And, Laxmi Bahadur Shrestha, one of the promoter directors who are willing to sale their shares, is still on the board. This has made it difficult for NRB to take a decision.

Shrestha represents the NB Group one of the key NBB promoters, on the bank board. Nepali promoters of NBB are planning to sell their shares to their Bangladeshi partner — International Finance Investment and Commerce (IFIC) Bank.

Although NRB’s legal department has already approved the share sale proposal saying that the transaction is internal, the NRB board is divided on the issue, according to an NRB source. “One of NRB board directors did not sign on the decision to allow the share sale,” said the source. “That’s why the issue has is still pending.”

IFIC, which, holds 10 percent stake in the bank, has sought to purchase about 26 percent stake of Nepali promoters and 15 percent stake of another Bangladeshi promoter Bank Asia. After the acquisition IFIC will have 51 percent stake in the bank.

The central bank has now sought a breakdown of the share structure of Nepali promoters so that the shares of those who do not represent in the bank board can be sold. “We are waiting for the response of our letter,” said a senior NRB official.

Besides seeking details of the share structure, the central bank has also told the NBB board that they should go for merger with NCC Bank if the proposed sales of the shares held by Nepali promoters could not be materialised.

“We called NBB board members to the central bank and told them to the go for merger with NCC in the case the proposed sale is not materialized,” said the NRB official. “We have made it clear that a single group (NB Group) will not be allowed to hold stakes in two banks.”

Source: The Kathmandu Post