RBB extends application deadline; plan to offload cross-holdings in NIBL, NHFC

KATHMANDU, FEB 23 - Rastriya Banijya Bank (RBB) has extended the deadline for filing applications for purchasing its shares in Nepal Investment Bank Limited (NIBL) and Nepal Housing Finance Company (NHFC) until mid-March 2014.

After failing to woo buyers despite two previous deadline extensions, the state-owned bank has also adopted flexibility on criteria for buyers this time.

Earlier, RBB had planned to sell the shares to the single highest bidder. As per the previous criteria, single or a number of firms could jointly bid to purchase all of its crossholding in NIBL and NHFC. However, the bank has now become ready to sell the shares to different bidders, if one bidder seeks to buy up to 10 percent of the total shares.

RBB has 5,652,016 shares in NIBL (15 percent) and 196,027 shares in NHFC. “We were forced to relax the criteria as we could not receive any bid,” said RBB CEO Krishna Prasad Sharma.

The RBB had first issued an auction notice on December 11, giving a deadline until mid-January, which was extended to mid-February.

After the Nepal Rastra Bank (NRB) prevented RBB from distributing dividend, citing the continued existence of crossholding in other banks and financial institution (BFIs), RBB moved to sell its shares in the two BFIs.

RBB has also not been able to receive Rs 140 million in cash dividend from NIBL due to the central bank’s prohibition. However, the amount will be released only after RBB sell its shares in two BFIs. NIBL’s recent annual general meeting okayed 10 percent bonus shares and 25 percent cash dividend to its shareholders.

According to Sharma, the central bank has also stopped the dividend to be received from NHFC.

The state-owned bank has fixed the minimum prices for NIBL and NHFC shares at Rs 594 and Rs 101 apiece respectively. As the value of promoter’s shares is usually lower than public shares, the minimum value fixed by RBB is also lower than the public shares.

The central bank directive states that it could stop BFIs, which have not offloaded cross-holding, from getting cash and stock dividend and buying rights shares. The dividend on hold will be released only after all the cross-holdings have been sold.

Bidders are required to first deposit 10 percent of the quoted amount in RBB.

Five years ago, RBB had tried to sell its shares in NIBL, but the plan was shelved due to a dispute with the Securities Board of Nepal (Sebon) over the minimum price. RBB had set the minimum price at Rs 1,068 apiece then, but Sebon said it was too high for promoter’s shares. At the time, the value of NIBL’s public shares was around Rs 1,900 apiece.

Source: The Kathmandu Post