International Finance Investment and Commerce (IFIC) Bank, a
Bangladesh-based commercial bank having a minority stake in Nepal Bangladesh
Bank (NBB), is all set to acquire the entire promoter holding in NBB. Among
others, two major promoter shareholders¿Nepali business house NB Group and
Bangladesh-based Bank Asia¿ are selling their stake to IFIC. After acquiring
the shares, IFIC plans to increase its stake in NBB to 51 percent from the
existing 10 percent.
Currently, Nepali promoters, including the NB group, hold 26 percent stake and
Bank Asia holds 15 percent in NBB. Once the deal completes, IFIC will have 51
percent stake in NBB, while rest of the shares will be owned by the general
public."Nepali promoters and IFIC representatives signed a Memorandum of
Understanding to this effect before Tihar," said Laxmi Bahadur Shrestha, an NBB
board member. "It has been planned to complete the Due Diligence Audit (DDA)
within 90 days to determine a reasonable price of the bank's shares." IFIC will
appoint a consultant for carrying out the DDA.
With this development, the NB group, which once promoted four financial
institutions, including NBB, will hold shares only in Nepal Credit and Commerce
(NCC) Bank. The group holds about 10 percent stake in NBB.""Henceforth, all our
attention will go to better NCC Bank"" said Shrestha, who is also the managing
director of the group. Earlier, attempts had been made to merge NBB and NCC
Bank. But the process did not move ahead.""As a good group sought to acquire
the majority stake, we opted to sell our shares for the bank's betterment""
IFIC had been trying to increase its stake in NBB since last year. It had
proposed the Nepal Rastra Bank that it was ready to acquire the shares held by
Bank Asia.""Lately, IFIC representatives were telling us that they want to hold
a majority stake in NBB and run the bank smoothly"" said a senior NRB official.
After its commitment to increase holding in once troubled bank, the central
bank had asked IFIC last month how they could hold a majority stake in the
bank. Then, the Bangladeshi bank intensified efforts to acquire entire promoter
holding in NBB. IFIC Bank, a joint venture between the Bangladeshi government
and the private sector, was set up in 1976 as a finance company and was
upgraded into a full-fledged commercial bank in 1983. The Bangladeshi
government now holds 32.75 percent stake in IFIC.
With IFIC acquiring the entire promoter holding in NBB, the latter will be
another joint venture bank in which foreign banks hold a majority stake. As of
now, there are five joint venture commercial banks in Nepal. After the
government opened the door for foreign banks to enter Nepal in joint venture in
mid-80s, Nepal Arab Bank (now Nabil Bank) was the first of the kind in the
country. After Nabil, the country saw entry of other joint venture banks,
including Standard Chartered, Himalayan, Everest and Nepal SBI Bank.