Standard Finance gets shareholders nod for merger with Machhapuchhre

KATHMANDU, APR 23 -

Standard Finance Limited has received the go ahead for the merger with Machhapuchhre Bank Limited (MBL) from its shareholders.

A special general meeting (SGM) of the finance company on Sunday endorsed the merger proposal, stated the company’s press release. The SGM also endorsed the due diligence audit report presented by the company’s board of directors, and a special proposal on the share prices set for merger—Rs 85 per share of Standard and Rs 100 per share of Machhapuch-hre—according to the company.

The finance company claimed it will be the largest ever the merger in the country, as the paid-up capital of merged bank will reach Rs 2.5 billion. The merged entity will have 600 employees and 54 branches across the country. The company expects that the merger would give a significant synergy to the new bank as finance companies and banks with small paid-up capital cannot give good returns to shareholders.

Earlier, the company’s SGM held on December 4, 2011, had permitted it to initiate merger process with an ‘A’ class financial institution.

The meeting had delegated the authority of selecting a commercial bank for the merger to the board of directors. After its bid to upgrade itself into a commercial bank by increasing paid-up capital failed due to changed central bank policy, it opted for merger.

The Nepal Rastra Bank has halted permitting finance companies to upgrade into commercial bank. The company had even increased its paid-up capital to Rs 1 billion from Rs 166.9 million by issuing 1:5 rights shares.

Standard CEO Umesh Singh Bhandari said they initiated the merger process in order to bring use the underutilised capital of the company as well as materialise shareholders’ wish to upgrade it into a commercial bank.

The company said that the decision for merger was taken also to benefit its shareholders amid its growing capital base. “The company would not have been in position to provide handsome returns to shareholders by functioning as a ‘C’ class financial institution,” said Bhandari.

Standard employs 100 individuals. On employee adjustment after merger, which is

considered a difficult task, Bhandari said they would take a cautious approach so that employees would not be disheartened.  “None of our staffers will be terminated after the merger,” he said.

The merger proposal includes forming a nine member board of directors after the merger. The board includes three members from the Standard and rest from MBL. “The merger process will gain momentum after MBL also gets approval from its SGM slated for April 10,” said Bhandari.

Source: The Kathmandu Post