Nepal Bank shares to be re-listed

KATHMANDU, NOV 8: 

Shareholders of Nepal Bank Ltd (NBL) are closer to getting their stocks traded at the stock exchange as the bank has formally applied for re-listing its scrip.

“It has applied for re-listing, so we are consulting with Finance Ministry and Nepal Rastra Bank (NRB) as it was de-listed on their order,” said managing director of Nepal Stock Exchange (Nepse) Shankar Man Shrestha. 

Nepal Bank was de-listed by Nepse in 2004, following the bank’s near insolvency state. The sorry state of the oldest commercial bank in Nepal prompted the government to introduce a restructuring programme with the help of donor agencies. 

“The re-listing will be done as soon as the ministry and NRB provide their recommendations and the price range for the shares is determined. It may be within a month,” added Shrestha. 

Even though the bank’s financial health has improved considerably, its net worth was negative by little more than Rs four billion in the beginning of the fiscal year. Thus, to increase capital and fulfill regulatory requirement, the bank will be issuing rights shares to existing shareholders at a 1:9.5 ratio.

The government, that owns 41 per cent stake in the bank, has agreed to purchase rights shares worth Rs 1.37 billion. According to the plan to increase the bank’s paid up capital to Rs four billion, the bank will raise funds worth Rs 3.62 billion by issuing rights shares to existing shareholders. The remaining will be raised by selling its fixed assets. 

“The negative net worth has gone down to Rs two billion this quarter, and the rights issue will help us fulfill the requirement to have a paid up capital of Rs two billion,” said coordinator of NBL’s management team Maheshwor Lal Shrestha. Since the bank’s operating profit is quite substantial, after settling the capital issues, it will be able to distribute dividends soon, he added. 

The bank is planning to issue rights shares after a couple of months of the listing. Last month, the government transferred 71,928 unit shares under its ownership to NBL’s 2,664 employees at Rs 100 face value through Over-The-Counter trading, due to delayed listing. 

NBL has appointed Civil Capital as its share registrar, and Citizens Investment Trust as issue manager for the rights issue. According to Civil Capital’s chief executive Bhisma Raj Chalise, the latest update shows there are about 9,300 shareholders of the bank, including majority stake holders.

Source: THT