Five merged entities begin operation as NMB Bank
Kathmandu, October 18
NMB Bank, Clean Energy Development Bank, Bhrikutee Development Bank, Pathibhara Bikas Bank and Prudential Finance Company formally wrapped up the merger process today by commencing joint operation.
This is the first time five financial institutions had completed the consolidation process in the history of Nepali banking sector.
The five financial institutions started joint operation based on final merger approval extended by Nepal Rastra Bank (NRB), the central bank, last month.
The merged unit, which is called NMB Bank, has capital fund of Rs 6.2 billion, deposit of Rs 54 billion and credit portfolio of Rs 41 billion. It also has 69 branch offices, 42 ATM kiosks, seven extension counters, two subsidiary units and one representative office in Malaysia.
NMB started its journey in 1996 as a finance company, or class ‘C’ financial institution. In 2008, it was upgraded to a commercial bank, or class ‘A’ financial institution.
Today, it has successfully roped in Clean Energy Development Bank, which has significant exposure in the energy sector, Pathibhara Bikas Bank, which has presence in the country’s eastern region, Bhrikutee Development Bank, which has expanded its reach in the western region, and Kathmandu-based Prudential Finance Company.
“With this merger, we can now assure NRB that we’ll be able to meet the new minimum paid-up capital requirement (of Rs eight billion for commercial banks) within the deadline of mid-July, 2017,” Pawan Kumar Golyan told an event organised to commence joint operation of the merged entity.
Since the NRB introduced the regulation on merger four years ago, 90 banks and financial institutions have merged into 34 units.
“In the initial days, mergers were seen only as a tool to raise paid-up capital. But now many are opting for merger to maximise value. This is very encouraging,” said NRB Deputy Governor Maha Prasad Adhikari.
An important aspect of this merger, according to NMB Bank, is alliance with international partners, FMO (Financierings Maatschappij-voor Ontwikkelingslanden) of the Netherlands and Young Lian. FMO — the international development bank of the government of the Netherlands with investment portfolio of 3.4 billion euros — is one of the largest bilateral development banks worldwide.
“FMO’s alliance boosts the bank’s exposure especially in energy sector and international trade,” says a statement issued by NMB.
Speaking on the occasion, Deputy Prime Minister and Minister for Physical Infrastructure and Transport Bijaya Kumar Gachhadar said that it is high time banks and financial institutions increase its exposure to productive sectors, especially agriculture and energy.
“Our focus should now be on economic development of the country as the new constitution has already been promulgated. Here, banks and financial institutions can play a crucial role by extending loans to productive sector,” he said.