Recapitalication Plan: Nepal Bank gears up to sell fixed assets

KATHMANDU, FEB 12 -

Nepal Bank Limited (NBL) is all set to issue a notice to sell its fixed assets in different parts of the country to increase paid-up capital. Besides collecting capital through rights issuance, the bank plans to raise Rs 2 billion by selling its property.

The oldest bank of the country will sell its unused land in about two dozen locations in two phases. “The notice will be issued within one-two days,” said Maheshwor Lal Shrestha, coordinator of the bank’s management team.

In the first phase, the bank will sell land located in eight prime locations, including Shantinagar of Kathmandu, Janakpur, Narayanghat and Birgunj. The bank has estimated the value of these land plots at Rs 900 million.

The bank decided to sell its land to the general public after its attempt to sell its property to government-owned entities failed with none of them willing to purchase. The bank has taken special approval from the government to sell the land plots to the general publicl.

“Although our conservative valuation is Rs 900 million, we hope to recover more than Rs 1 billion from the sales of the property as the land plots are in prime locations,” said Shrestha.

In the second phase, the bank will sell its land in more than a dozen locations outside the Kathmandu valley. The land plots, however, can only be sold to government entities. “As the Cabinet has decided that a government-owned entity can sell its property only to another state-owned unit, we have to first try to sell the property to other state-run entities,” said Shrestha.

The bank plans to complete both the phases of sales within the current fiscal year. It is also planning to raise Rs 3.61 billion through rights issuance. It is planning to send its prospectus to the Securities Board of Nepal for approval. “We hope to issue rights shares by February-end,” said Shrestha.

The government, being the largest shareholder of NBL, has already injected Rs 1.39 billion from its part as rights shares, while other shareholders are expected to inject the remaining amount after right shares issuance.

The government has around 36 percent stake in the bank, while the general public, including corporate houses, hold 49.94 percent stake. Business groups like Khetan and Golchha, and individuals such as Pashupati Sumser Rana, Niranjan Kumar Tibdewala, Gajendra Bahadur Shrestha, Niraj Rajbhandari, Ramesh Raj Aryal, Nabin Narshing Rana, Indira Khatri, Kedar Narayan Manandhar and Bal Krishna Shrestha have sizeable shares in NBL.

As per the bank’s capital plan, NBL will issue 1:9.5 rights shares, meaning shareholders will have to inject 9.5 times of their shareholding in the bank. Following the government’s fund injection, NBL’s paid-up capital has increased to Rs 1.77 billion from Rs 380 million. After remaining shareholders put in their money, the bank’s paid-up capital will reach Rs 4 billion.

Source: The Kathmandu Post