World Bank tells govt to offload its shares at NBL

KATHMANDU, April 16 :

The World Bank has suggested that the government offload its shares from Nepal Bank Limited (NBL), paving the way for the private sector to run the oldest financial institution in the country in a prudent manner.

The government owns 38.60 percent of the shares worth Rs 1.53 billion in NBL. Remaining shares are owned by different organizations, staffers of the bank and general public.

Nepal Rastra Bank (NRB) - the central regulatory authority - has been looking after the management of the bank since 2002 under the Financial Sector Reform Program (FSRP) in 2002. The government had initiated reforms at NBL and Rastriya Banijya Bank in 2002 with technical and financial assistance of the World Bank and Department for International Development (DFID) of the United Kingdom.

“The government requested for assistance of the World Bank in order to initiate reforms at the banks and gradually offload its shares held in the banks,” Madhu Kumar Marasini, joint secretary at International Economic Aid Coordination Division (IEACD) under Minstry of Finance (MoF), said.

The FSRP was initiated when Bhanu Prasad Acharya was finance secretary. “The government extended loans to NBL and RBB to improve their financial health,” Acharya said, adding, “They were asked to pay back their loans once their financial health improves.” He also said the World Bank had asked the government to offload its shares in the bank at that time also.

The government has extended loans worth Rs 7 billion to improve financial health of both the financial institutions.

NRB is preparing to hand over the management of NBL to the shareholders after holding the bank´s annual general meeting (AGM) in July. “We will hand over the management soon,” Maheshwor Lal Shrestha, convener of management team of NBL, told Republica. “NBL´s capital adequacy ratio stands at one percent at present. We have to increase it to 10 percent as per the central bank´s requirement by selling the bank´s assets and making it profitable.”

NRB had handed over the management of RBB in March 2011.

Altogether 39,655,236 units of shares of NBL have been listed for trading on Nepal Stock Exchange (Nepse). NBL shares were traded at Rs 318 per unit on Tuesday.

“Prominent businesspeople like Binod Choudhary and Rabi Bhakta Shrestha are buying NBL shares from the secondary market,” an executive of the reputed securities company told Republica.

Nepal Bank had issued 1:9.51 rights shares six months ago.

Source: Republica