Five BFIs start joint operations as NMB Bank following merger-My Republica

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Dipesh Shrestha/Republica Deputy Prime Minister Bijaya Kumar Gachchhadar (2nd from left) lights an oil-lamp to mark the starts of joint operation after a merger of NMB Bank at a ceremony in Durbar Marg, Kathmandu on Sunday

KATHMANDU, Oct 19: NMB Bank Ltd, three development banks and a finance company has commenced joint operation following a successful merger.

Deputy Prime Minister and Minister for Physical Infrastructure and Transport Bijaya Kumar Gachchhadar inaugurated the joint operation on Sunday amid a ceremony.
 

The five bank and financial institutions (BFIs) had initiated merger in September last year. NMB Bank had signed memorandum of understanding for merger with two regional-level development banks — Bhrikutee Development Bank Ltd and Pathibhara Bikas Bank Ltd — in September last year. It had brought Clean Energy Development Bank Ltd and Prudential Finance Company on board in December last year.

The bank had received final approval for merger from Nepal Rastra Bank (NRB) on September 29. This is the first merger of five BFIs in the history of Nepali banking industry.

NMB Bank, which was established in October 1995, is the first Class 'C' financial institution that upgraded itself into a 'A' class commercial bank in 2008.

Speaking at the inaugural ceremony, officials of NMB Bank said merger will to enhance the competitiveness of the bank at a time when international banks are eyeing to enter Nepal. "As Nepal braces for graduation from the least developed country to a developing country by 2022 and per capita income of US$ 4,000 by 2030, there should be massive financing on various sectors including infrastructure. The merger would enable us to contribute to the government mission by increasing financing to these sectors," Kamalesh Agrawal, coordinator of merger coordination committee, said.

Similarly, Pawan Kumar Golyan, chairman of the bank, said the successful merger will enable the bank to adapt the changes seen in the banking and financial sector. "We can expect economic development to gain pace following the promulgation of new constitution. We can now make significant contribution in country's economic development," added Golyan.

Speaking at the program, Deputy Prime Minister Gachhadar said that the banks should help mobilize remittances in the productive sector. "Banks should increase their financing in the agricultural and hydropower sectors which will make the economy self-dependent," he said. "The country will shift its focus on economic development. The private sector, including the banking industry, will have an instrumental role in economic development."

Likewise, NRB Deputy Governor Maha Prasad Adhikari said that merger among BFIs will help achieve the central bank's policy of financial consolidation. "Earlier, mergers used to be for survival. Now it is for synergy and creating a value effect," he added.

According to a NRB, 90 BFIs have undergone merger over the past four years to become 36 BFIs.

"We can also expect that productive sector lending will rise as the capital base of BFIs will increase after the merger. This type of merger, which also involves a foreign venture, will also help the domestic institution to become technically capable through technology and skill transfer," he added.

Malaysian firm Yong Lian and FMO (Financierings Maatschappij-voor Ontwikkelingslanden) of the Netherlands hold stake in the merged entity. While FMO, International Development Bank of the Government of the Netherlands with investment portfolio strength of 3.4 billion euros, held stake in CEDBL, Yong Lian was one of the major shareholders of the NMB Bank.

NMB CEO Upendra Poudyal said that the merger will help the bank to easily meet the newly set minimum paid-up capital. "Now our service will expand to various parts of the country," he zsaid, adding that the merger between five institutions was a strategic move of the bank to increase its foothold across the country. "The merger with two regional-level development banks will strengthen our retail base as well as increase our footprint at a pan-Nepal level," he said. "This move well establishes the bank's position as one of the leading commercial banks in the country, with bigger capital base to serve its customers better in every aspect."

Issuing a statement, NMB Bank said its total capital and reserves now stand at Rs 6.2 billion, with consolidated deposit of Rs 54 billion and loans and advances of Rs 41 billion following the merger.

The merged entity will have 69 branch offices, seven extension counters, and 42 ATM terminals across the country.

 

Published on: Republica (October 19, 2015)