RBB plan to issue share to general public worth Rs 3 billion

Sharesansar, January 5:

Rastriya Banijya Bank (RBB) one of the oldest and state owned commercial bank planning to go public by issuing primary shares worth Rs 3 billion, which is 30 percent of the total share capital of the bank.

RBB which already fulfilled the capital adequacy ratio requirement in the second quarter to fully recover from the crisis said that the company is waiting for the government’s approval for the proposed IPO. RBB, which was on the brink of collapse due to massive loan defaults, had undergone the financial sector reforms programme for over a decade.

Rastriya Banijya Bank Limited (RBB) has able to make its capital adequacy ratio (CAR) positive by 10.05 percent. Prior, RBB capital adequacy ratio was negative by 33 percent.

Recently, Rastriya Banijya Bank has sold 15 percent promoter share of Nepal Investment Bank Limited and Nepal Aawas Finance Limited on auction to the general public and institutional investors from which the bank has been able to earn Rs 2.8 arba approximately, which help to increase its capital fund.

Government of Nepal (GOI) has injected Rs 4.32 billion as capital in 2069. The bank has also converted Rs 3 billion as capital which they have received from World Bank under financial sector reform program

The bank also converted preference share worth Rs 78.70 crore to ordinary share in Asar, 2070. RBB is also planning to issue ordinary share to the general public in the next fiscal year.

RBB said the IPO will change its shareholding structure and the participation of the public will help it grow.

“Rather than bringing in a strategic partner, we think going public will help the bank achieve sustainable growth,” RBB Chairman Rewat Bahadur Karki said at a press meet here on Sunday.

The bank has lowered the non performing loan (NPL) level to 4 percent from once more than 60 percent. It has been earning profits for last six years. Last year, it earned a net profit of Rs 1.75 billion. RBB also plans to expand its businesses. A credit-to-deposit (C/D) ratio of just 61 percent gives the bank a huge space to expand credit.

It plans boost its credit disbursement by Rs 15 billion to Rs 77 billion by this fiscal year.