NRB grants LOI to 4 institutions for merger and acquisition; Adding brinks to financial market consolidation

Nepal Rastra Bank (NRB) has granted Letter of Intent (LOI) to four organizations to proceed with merger and acquisition as per the decision made at the meeting held at NRB on Thursday. These organizations are:

1. Merger between Tinau Development Bank and Mission Development Bank
2. Sadhana Laghubitta Bittiya Sanstha to acquire Aarthik Sambriddhi Laghubitta

Tinau development bank and Mission development bank

The development banks had signed MoU on Chaitra 3, 2075 and their trading in NEPSE is halted for now.

After the completion of the Merger process, the company will be operated under the name of Tinau Development Bank Limited and the corporate address will be Butwal, Sub Metropolitan City. Similarly, the CEO of the t institution will be Mr. Pradip Kumar Shrestha, who is the current CEO of TNBL. Likewise, the CEO of MIDBL, Mr. Hariprasad Ghimire will be taking the post of Deputy CEO.

The paid-up capital of TNBL is Rs.56.77 Crore while that of MIDBL is Rs.57.64 Crore. The LTP of the banks as on 17^th March 2019 stood at Rs.166 and Rs.162 respectively.

The swap ratio will be 1:1 approx and both the companies have agreed for Due Diligence Audit (DDA).

It is stated in the MoU that Merger process will be completed by Shrawan 30, 2076 and the Board of Director will be appointed in the 1^st AGM after the merger as per the provisions contained in the Banking and Financial Institution Act, 2073.

Sadhana Laghubitta and Aarthik Samriddhi Laghubitta

Both the institutions are 10 district microfinance companies.The agreement regarding the same was signed between chairman of Sadhana Microfinance Mr. Krishna Bahadur Thapa and Dr. Ek Narayan Chapagain from Arthik Sambridhi Microfinance.

The joint entity will be called Sadhana Laghubitta and will have its head office in Gorkha, as per the agreement.

Sadhana Laghubitta has a paid up value of Rs Rs 4.90 crore with 26 branches while Arthik Sambridhi Laghubitta has paid up value of Rs 3.06 crore with 14 branches. Similarly, Sadhana Laghubitta is in the process of issuing 100% right shares, after which the capital will reach Rs 9.80 crore and Arthik Samriddhi Laghubitta is in process of issuing 60% right shares too.