RBB looks to offload stake in NIBL‚ NHF

KATHMANDU:

Rastriya Banijya Bank (RBB) has decided to approach multiple institutional investors to offload its stake in Nepal Investment Bank Ltd (NIBL) and Nepal Housing Finance (NHF) after its attempts to sell those shares in bulk failed.

The state-owned commercial bank currently owns 6.22 million units of promoter shares in NIBL and 198,497 units of promoter shares in NHF, including bonus shares recently extended by these institutions. It is selling these shares as per the instruction of Nepal Rastra Bank, the banking sector regulator, which restricts cross holding.

To offload these shares, the bank first issued a public notice on December 11 asking institutional investors to submit their bids within January 14. At that time, the bank held 5.65 million units of shares in NIBL and 196,027 units of shares in NHF; and the minimum bidding price for each NIBL share was fixed at Rs 594 and for every NHF share was Rs 101.

The only condition was that the highest bidder had to purchase all of NIBL or NHF shares up for grabs. But no one took part in the bidding.

It then published the same public notice for the second time. But again there was no response from institutional investors.

“It is not that investors are not interested in purchasing these shares. It is just that the cost comes out to be quite high,” RBB CEO Krishna Prasad Sharma said.

As per the minimum bidding price quoted by RBB in December, an investor buying shares of NIBL had to fork out at least Rs 3.36 billion to purchase all of NIBL promoter shares being offloaded by the state-owned bank and Rs 19.80 million to buy all of NHF shares.

Many investors, these days, do not want to invest such a huge amount in the banking sector, as returns are falling every passing year due to tough competition.

Against this backdrop, RBB has now allowed interested institutional investors to bid for at least 10 per cent of its shares in one of the two institutions. The bidding documents have to be submitted within March 15 and at least 10 per cent of the price quoted by the bidder has to be deposited at any one of the bank’s branch as security deposit. Priority will be given to the highest bidder while allotting shares, RBB has said.

The number of promoter shares of NIBL and NHF being floated by RBB this time is higher by 10 per cent and 1.2 per cent, respectively, than in December, as it has also included bonus shares received from the two institutions.

If RBB can offload its stake in these two financial institutions, it stands to earn at least Rs 3.89 billion.

Source: THT