Nepal Bank shares to be traded on OTC market

KATHMANDU, SEP 10 -

After a decade long absence, the shares of the Nepal Bank Limited (NBL) are likely to make a return to the stock market, soon. 

The NBL is making final preparation to enlist its shares on the Nepal Stock Exchange (Nepse) after they were delisted due to the implementation of the financial sector reform programme in the the country’s oldest bank.

Despite being listed on the Nepse, NBL shares will be, however, first traded in the over the counter (OTC) markets that trade in stocks directly between the sellers and buyers outside the regular secondary market.

According to Nepse’s OTC bylaws, the de-listed shares should be traded on the OTC market. It will be the first such trading in the country should that materialise.

“The trading of NBL shares will open the door for other companies to the OTC market,” said Shankar Man Singh, Nepse general manager. “The operation of the OTC market has been necessary to increase the liquidity in the capital market.”

The NBL, preparing to issue rights share as per its recapitalisation plan, requires to first re-list its shares on the Nepse for the purpose. “We are making all preparation to conclude listing of our shares within mid-September,” said Maheswor Lal Shrestha, coordinator of the NBL management team.

For this, the NBL has sought an approval for allocation of 5 percent of the government’s stake to the bank employees as per the capital plan. “We have already submitted our proposal to the government,” said Shrestha. “As soon as the Cabinet takes a decision in this regard, we will re-list our shares on Nepse.”

According to him, the bank employees will hold their stake in the bank through the process of rights shares. “We have already raised money from 96 percent of our

employees,” said Shrestha. The right shares will be issued on par value—Rs 100. The bank expects to raise Rs 3.62 billion, of which Rs 1.39 billion has already come from the government.

The NBL is planning to issue rights shares within first week of October and allot shares within mid-December. The bank is currently planning to issue rights shares at 1:9.5 ratio (holders of each share will have to purchase 9.5 additional shares).

 However, the capital raised through rights issue will not convert the bank’s negative net worth into positive.

The government, one of the bank’s major shareholders, currently has 40.49 percent stake in the country’s oldest bank while the public shareholders hold 49.94 percent stake.

Other banks hold 4.92 percent and while financial institutions hold 3.42 percent

stake. The NBL expects to raise an addition capital of Rs 2 billion through the sales of its fixed assets.

All NBL shares will be ordinary

Unlike other banks, all the shares of the Nepal Bank Limited will be traded as ordinary shares. “It is because all the shares were being traded as ordinary shares before delisting,” said Shankar Man Singh, general manager at Nepse. Usually, the price of promoter shares remains much lower than ordinary shares.

Source: The Kathmandu Post