Vibor will recover in 3 months: Ghimire
Fri, Jun 10, 2011 12:00 AM on Others,
Kathmandu, June 10:
Vibor Bikas Bank (VBB) that surrendered to Nepal Rastra Bank for rescue has said that it is still a solvent bank and assured the depositors that their savings are safe. Following the central bank´s bail out package, Milan Mani Sharma and Akanksha Upadhyay of Republica talked with Vibor´s Chief Executive and Chairman, Ajay Ghimire on what went wrong in the bank and its immediate priorities for immediate future. Excerpt:
What went wrong in the bank?
We had only one problem: liquidity crunch. The cash flow did not come at the anticipated level, whereas our liability, particularly repayment of matured fixed deposits buoyed. As a manager I have to admit our assessment of the future market conditions went wrong. But good thing is; this has not hurt our financial health. We are a solvent bank and have a strong asset-base to service all liabilities, including repayment to depositors.
You knew about maturity of fixed deposits well ahead and you also knew they are not bound to renew their accounts. Did not you have alternate plan for liquidity management?
We had plans of course. But we could not executive it because the market was distressed more than what we anticipated. The confidence of depositors too had sapped. We failed to anticipate this situation.
When did you feel you need a bail out?
Liquidity crunch has been there for more than a year. But we felt the first warning signal when Gorkha Development Bank became troubled and shut down services to avoid possible meltdown. After Nepal Share Market Finance faced trouble, we too thought we should not linger our case and instantly consult the NRB for its support.
Now that you have got the bail out package, what are your immediate priorities?
Our immediate focus now is to convince the customers that we are in good health. We will work to preserve the value we hold on "customers´ satisfaction and care". Some damages have occured in this front due to rumors in the market, but I am sure we will regain public confidence. We will also step up initiatives to improve liquidity position. For this we will continue to expedite asset disposal process.
NRB has sought a categorical asset disposal plan to be assured about your liquidity. When are you submitting that?
We will submit it within 15 days.
NRB has asked for the separation of the positions of Chairman and Chief Executive Officer (CEO). When will you do that? And which role will you assume?
We will take action to this connection soon. In fact, we were already planning internally to split the role of CEO and chairman. We had deferred it solely because of the liquidity problem we faced. As my contract of CEO is effective till August 19, I presume I will stick to this post till then. But we will decide about it once things settle down.
NRB has asked you to undergo merger. How do you plan to comply?
Yes, we have agreed to a condition of merger. Under this, we have committed to at least sign a Memorandum of Understanding (MoU) with a financial institution within three months. It is difficult for me to say now how this will move ahead, but what is for sure is we are open to merger and had planned to look for possible local institutions after July when we will be in profit.
By when do you think Vibor will recover?
Our target is to achieve that within three months. Although we have loans from NRB for six months, we do not want to wait all through that period. If everything goes well, we will pay back NRB´s loan in three months.
Source: Republica
Vibor Bikas Bank (VBB) that surrendered to Nepal Rastra Bank for rescue has said that it is still a solvent bank and assured the depositors that their savings are safe. Following the central bank´s bail out package, Milan Mani Sharma and Akanksha Upadhyay of Republica talked with Vibor´s Chief Executive and Chairman, Ajay Ghimire on what went wrong in the bank and its immediate priorities for immediate future. Excerpt:
What went wrong in the bank?
We had only one problem: liquidity crunch. The cash flow did not come at the anticipated level, whereas our liability, particularly repayment of matured fixed deposits buoyed. As a manager I have to admit our assessment of the future market conditions went wrong. But good thing is; this has not hurt our financial health. We are a solvent bank and have a strong asset-base to service all liabilities, including repayment to depositors.
You knew about maturity of fixed deposits well ahead and you also knew they are not bound to renew their accounts. Did not you have alternate plan for liquidity management?
We had plans of course. But we could not executive it because the market was distressed more than what we anticipated. The confidence of depositors too had sapped. We failed to anticipate this situation.
When did you feel you need a bail out?
Liquidity crunch has been there for more than a year. But we felt the first warning signal when Gorkha Development Bank became troubled and shut down services to avoid possible meltdown. After Nepal Share Market Finance faced trouble, we too thought we should not linger our case and instantly consult the NRB for its support.
Now that you have got the bail out package, what are your immediate priorities?
Our immediate focus now is to convince the customers that we are in good health. We will work to preserve the value we hold on "customers´ satisfaction and care". Some damages have occured in this front due to rumors in the market, but I am sure we will regain public confidence. We will also step up initiatives to improve liquidity position. For this we will continue to expedite asset disposal process.
NRB has sought a categorical asset disposal plan to be assured about your liquidity. When are you submitting that?
We will submit it within 15 days.
NRB has asked for the separation of the positions of Chairman and Chief Executive Officer (CEO). When will you do that? And which role will you assume?
We will take action to this connection soon. In fact, we were already planning internally to split the role of CEO and chairman. We had deferred it solely because of the liquidity problem we faced. As my contract of CEO is effective till August 19, I presume I will stick to this post till then. But we will decide about it once things settle down.
NRB has asked you to undergo merger. How do you plan to comply?
Yes, we have agreed to a condition of merger. Under this, we have committed to at least sign a Memorandum of Understanding (MoU) with a financial institution within three months. It is difficult for me to say now how this will move ahead, but what is for sure is we are open to merger and had planned to look for possible local institutions after July when we will be in profit.
By when do you think Vibor will recover?
Our target is to achieve that within three months. Although we have loans from NRB for six months, we do not want to wait all through that period. If everything goes well, we will pay back NRB´s loan in three months.
Source: Republica
