Nepal Bank to be re-listed within this fiscal year

KATHMANDU, JUNE 7: 

Nepal Bank is working to get re-listed at the stock exchange before the current fiscal year ends in order to carry out its recapitalisation plan.

The country’s oldest commercial bank which has a negative net worth of Rs 4.22 billion is following a strategic plan to get the largest commercial bank back to its feet after going through a decade-long restructuring. In order to make its capital fund positive along with the need to increase its paid up capital, it is seeking to issue rights shares to the existing shareholders.

“The bank needs to be listed at Nepal Stock Exchange (Nepse) for a certain time and its shares need to be actively traded before we can come up with the rights issue so we have already started the necessary procedure for re-listing,” informed coordinator of the management committee of Nepal Bank Maheshwor Lal Shrestha. 

According to the plan to increase the its paid up capital to Rs four billion, it will raise funds worth Rs 3.62 billion by issuing rights shares to shareholders. “We are planning to get the rights shares listed before mid-November this year,” he added. 

The bank has already appointed a share registrar to take account and update information of the shareholders and of share holding. The government holds 41 per cent stake in the bank while 50 per cent is owned by public shareholders and the remaining belong to different financial institutions. Of the 50 per cent owned by public shareholders, half belongs to minority shareholders and the other half is owned by some of the large industrial groups of Nepal.

Nepse had de-listed Nepal Bank in 2004 due to the bank’s near insolvency state, prompting a decade-long Financial Sector Restructuring Programme. The bank’s 3.8 million unit shares were listed at Nepse at that time. Shareholders of the bank have to decide on whether to subscribe for rights shares or allow others to pick it up through an auction if they are not interested.

“The initial response of the shareholders is positive and they have assured to subscribe to the rights issue,” said coordinator 

of the management committee. As for minority shareholders, Shrestha assured them that in the next two years, the bank will be strong and yield higher returns on their investment. 

When the World Bank funded restructuring programme started in 2002, the bank’s negative net worth exceeded Rs 12 billion. According to the capital restructuring plan which Nepal Rastra Bank and Finance Ministry had approved in February, Nepal Bank has decided to issue rights shares at 1:9.5 ratio, sell the bank’s assets and raise about Rs 2 billion and capitalise profits earned by the bank worth Rs 1 billion.