Nepal | November 17, 2019

RBB-NIDC merger to conclude by mid-March

Himalayan News Service

Kathmandu, January 19

The joint merger committee formed by Rastriya Banijya Bank (RBB) and NIDC Development Bank (NIDC) has decided to complete the merger process on March 15. After finalising the swap ratio at 1:1, the joint merger committee has set the new deadline to complete merger process.

The joint merger committee has finalised the swap ratio as per the due diligence audit (DDA) report of the consulting firms appointed by both the financial institutions separately. As per the swap ratio, per share value of both banks will have equal status.

Nepal Rastra Bank (NRB) — the central regulatory and monetary authority of the country — has granted principle agreement to the swap ratio. As per the DDA report, any public shareholder of NIDC wanting to sell their shares would get Rs 4,484.30 per unit. The amount is significantly higher than NIDC’s last trading price of Rs 150 per unit on August 28. NIDC’s share transaction has been halted since it signed the MoU with RBB.

RBB is a fully government-owned commercial bank, which has paid-up capital of Rs 8.58 billion. This amount exceeds the minimum paid-up capital criteria for commercial banks set by NRB at Rs eight billion. Paid-up capital of NIDC is
Rs 415.8 million and the general public has 30,910 units or 0.74 per cent share in the bank.

NIDC has called its special general meeting on February 2 to endorse the agenda of merger with RBB. The general meeting will also approve the swap ratio. Similarly, RBB has called a special general meeting on January 24 to pass the agenda of merger.

According to Mukunda Prasad Panthi, a member of the joint merger committee, the issue regarding settlement of staffers of NIDC is still to be resolved. “We are planning to announce voluntary retirement scheme for the staffers of NIDC. The criteria for this has not been finalised yet,” he informed. “But we are not expecting any major obstacles in resolving this issue, after which we will be ready for unified operation of the two banks.”

Altogether, 38 permanent staffers are working in NIDC. Likewise, few staffers are working on contract basis in both the banks. As per the agreement between the two banks, the contract of such staffers will be terminated after completion of the merger process.

A Cabinet meeting, held on January 17, had also urged both the institutions to expedite the merger process. Earlier, they had set the deadline to complete the merger process within mid-January. However, as some preparatory works are still remaining, the date of unified operation has been postponed to mid-March.

The peso, which has been hammered by Trump’s protectionist threats to ditch NAFTA, is likely to appreciate sharply, as much as eight per cent, while the seesawing Canadian dollar could make small gains or remain flat.

However, some respondents said terminating the agreement could send the Canadian dollar and the peso tumbling, hurting those nations’ economies. The greenback could also sink as much as five per cent.

A version of this article appears in print on January 20, 2018 of The Himalayan Times.

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