Kathmandu, February 1:

The management team of Rastriya Banijya Bank (RBB) led Bruce F Henderson is going to say goodbye to about 10 reform consultants in a phase-wise manner by replacing them with local staff as successors.

A total of 18 consultants are being employed under the new management for the past three years with a view to reform the bank which had become ‘technically insolvent’ as per the KPMG report in 2000, an international auditing firm. During the tenure of the reform team, the bank has been able to generate a profit of about three billion rupees.

It has set targets to reduce NPAs from over 60 per cent to 28 per cent by July 2007, as announced by Henderson, CEO of the bank at a recently concluded anniversary of the bank.

According to sources at the bank, reduction of manpower in the ‘reform team’, is in line with the provisions of contract agreement reached between the Nepal Rastra Bank (NRB) and the new management.

Sources disclosed that the ‘move’ is aimed at reducing the cost of management from Rs 120 million to about 70 million for a period of one year.

NRB has already extended the term of Henderson team for a period of two years. However, before the completion of two years, about 10 consultants will go with proper recognition for their contribution to bank’s reform process and for having transferred their knowledge to bank’s staff, said one of the senior officials of RBB on conditions of anonymity.

Those consultants who are hired in different departments under the reform team such as finance, operations, branches, accounting, lending, among others will have to ‘leave’ the bank in six, nine, twelve, 15 and 18 months which the NRB has termed as a ‘phase-wise’ manner.

The sources also disclosed that the government has directed the existing management team of RBB to create an environment to privatise the bank as it has a huge network and holds tremendous potential. The management team of the bank has to be able to prepare banks’ staff to replace the reform consultants working currently. NRB has already directed RBB management to maintain NPA at one per cent from now onwards while lending, says the source. Difficult days lie ahead for the management of RBB to accomplish these set goals.