NCC offloads around 6 lakh units of NHPC scrip, more could be sold off

ShareSansar, June 2:

Nepal Credit and Commerce Bank Limited is yet to recover much of the defaulted loan from NB Group despite selling off around 4.5 lakh units of ordinary shares of National Hydropower Company Limited (NHPC) on a single day yesterday.

“The shares were off loaded to recover loan released to NB Group against the shares,” NCC Bank’s Chief Executive Officer Amrit Charan Shrestha told ShareSansar today, adding that the bank has sold off around six lakh units of NHPC shares among some 28 lakh units pledged by the NB Group against loan.

He further informed that since NCC Bank’s only interest is to recover the defaulted amount, it has also been cooperating with NB Group to wait for the right moment to sell off the shares and other assets pledged by the group against loan.

But CEO Shrestha was quick to add that the bank might have to square off more of the NHPC shares if they cannot sell a plot of land pledged by the defaulter if it does not repay the rest of the loan by Ashad end (mid-June) – the deadline given to NB Group to settle the loan.

But he declined to give the exact figure of loan taken by NB Group by pledging various assets.

NB group had reportedly taken a loan worth Rs 7 crore from the bank by pledging 98 annas of land at Thaiba in Lalitpur as collateral more than two years back. When the bank had tried to auction the land last year, it could not find any bidder who was willing to quote even Rs 3 crore for that land—forcing the bank to call of the auction since the loan amount has now exceeded Rs 10 crore after calculating the interest.

At this point, however, the bank management is quite upbeat about recovering the loan.

Recovers marginal lending

“One good news is that we have now recovered the loan against share (marginal lending),” informed Shrestha, who has been day-to-day operation of the bank though the central bank has taken over its management.

Insofar as yesterday’s transaction is concerned, NHPC’s trading floorsheet reveals that most of the shares were sold by broker number 33, and they were bought in a few matching transactions by some large as well as retail investors in several transactions through other brokers.

Little wonder that NHPC had one of the highest turnovers of Rs 7.12 crore at Nepal Stock Exchange Limited (NEPSE) yesterday – second only to the turnover of Chilime Hydropower Company Limited (CHCL).

'Combined AGM likely’

Regarding the impending Annual General Meeting of the bank,  CEO Shrestha said that since the central bank is yet to approve the balance sheet for the last fiscal year, and that the current fiscal year itself is drawing to an end, they might call a combined AGM for the two fiscals.

“The problem is that the central bank is yet to take any decision on the balance sheet we had forwarded a few months back for the last fiscal year,” he said. “Given the situation, we might end up holding AGMs for the last as well as the current fiscal year together.”

Back in March, a highly placed source at NCC Bank had told ShareSansar that the bank could offer 15 to 18 percent bonus shares to the shareholders from the profit it posted in the last fiscal year and additional bonus shares from the projected profit of the current fiscal year to meet the paid-up capital requirement of Rs 2 arba by the end of the current fiscal year 2070/71.

The bonus share from the projected profit of the current fiscal will, however, not be endorsed by the upcoming AGM for the last fiscal year, but by the next AGM for the current fiscal year, according to the source.

He further said that since the bank is simply not in a position to give more than 18 percent dividend from the net profit it posted in the last fiscal year 2069/70, and that it has decided not to issue right shares, the bank is requesting the central bank to allow it to give bonus share from the projected profit of the current fiscal.

“Though a merger is another option to meet the paid-up requirement, it will take months before we can finalize a deal. Hence, we are currently thinking about offering bonus shares from the projected profit of the current fiscal year,” the source explained.

If his statement is anything to go by, NCC will most probably pledge 18 percent bonus share from the net profit it posted in the last fiscal so that its paid-up will rise to Rs 173 crore, and additional 15 percent bonus share from the project profit for current fiscal, which will then shore up the paid-up to Rs 2 arba.

Or it can issue lesser bonus shares for the last fiscal and more for the current fiscal.

The bank has already submitted a preliminary audit report to the central bank in this regard, and that the central bank could endorse it as there is a provision of distributing dividend from the projected profit.

"We will propose the bonus shares after the central bank approves our preliminary balance sheet," the source said.

NCC is the only commercial bank that is yet to announce dividend and the AGM for the last fiscal year.

The crisis-ridden bank, whose management has been taken over by the central bank after NCC’s financial health deteriorated owing to strife between two promoter groups, one associated with NB Group and the other close to Nirmal Pradhan, a big shareholder.

In February, the central bank had suspended the NCC Board of Directors and set up a three-member management team led by NRB Director Laxmi Prapanna Niraula and Deputy Director Ramesh Acharya and Assistant Director Resham Raj Regmi as its members.