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B'desh-based IFIC Bank to acquire majority stake in NB Bank
02, Nov 2011

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"" said Shrestha.

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.

Source:
ekantipur

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