KATHMANDU, JUNE 16
Consolidation in the country's banking sector through mergers and acquisitions seems to be gathering momentum with two more commercial banks announcing marriage in a span of less than a week.
Today, the Global IME Bank and Bank of Kathmandu (BOK) signed an initial memorandum of understanding (MoU) for merger.
The MoU was signed by Chairman of Global IME Bank Chandra Prasad Dhakal and Chairman of Bank of Kathmandu Prakash Shrestha, on behalf of their respective organisations.
An agreement has been reached to name the new merged entity 'Global IME BOK Ltd'.
Similarly, it has been agreed that incumbent Global IME Bank Chief Executive Ratnaraj Bajracharya will be the CEO of the new bank post-merger.
A preliminary agreement has been reached to maintain a swap ratio of 1:1, with the provision of change based on the due diligence audit of both the banks.
As both the banks have merged and acquired a number of banks and financial institutions in the past, the Global IME BOK Ltd would mean M&A of 21 banks and financial institutions - five 'class A' commercial banks, 10 development banks and six finance companies.
The total capital of the bank after the merger will stand at Rs 52.29 billion, paid-up capital at Rs 34.41 billion, total deposits at Rs 384 billion and total credit at Rs 380 billion, creating a banking behemoth in the country.
In addition, both the banks have earned a net profit of more than six billion rupees by mid-May. The banks have claimed that the Global IME BOK Ltd will be the largest bank in the country post-merger with 385 branch offices, 367 ATMs, 275 branchless banking services, 61 extension counters, three overseas liaison offices, more than 3.7 million customers and many other financial indicators.
After the merger of the two banks, the new entity plans on further increasing its capital, working area and working capacity and establishing itself in the financial market as the strongest and most capable bank in the country to provide excellent services and facilities to its customers and give higher returns to investors.
On June 10, Nepal Investment Bank Ltd and Mega Bank Nepal had also announced they had initiated the process of going for merger to create a banking giant with total paid-up capital of Rs 34.43 billion. NIBL Chairperson Prithvi Bahadur Pandé and Mega Bank Nepal Chairperson Bhoj Bahadur Shah had signed an MoU to take forward the merger process to form 'Nepal Investment Mega Bank Ltd'. Earlier, NIBL had inked an MoU for merger with Himalayan Bank. However, the planned merger fell through when the annual general meeting of the HBL rejected the plan.
Even earlier, on January 13, Nabil Bank had signed an MoU to acquire Nepal Bangladesh Bank (NBB). According to the agreement, the swap ratio had been set at 100 units of shares of Nepal Bangladesh Bank to 43 units of Nabil Bank. In March, the Nepal Rastra Bank principally agreed to the acquisition, following which all of NBB's business transactions will be in the name of Nabil Bank.
A version of this article appears in the print on June 17, 2022, of The Himalayan Times.
