Himalayan and Nepal Investment Bank Signed MoU to Merger:
The largest merger agreement in the history of Nepali banking. Nepal Investment Bank and Himalayan Bank, two of Nepal's oldest and largest commercial banks, reached a merger agreement on Thursday. Although the merger has been discussed for a long time, a preliminary understanding (MoU) has been reached between the Chairman of the two banks to complete the merger within the next two months.
The MoU has been signed by Chairman Prithvi Bahadur Pandey on behalf of Nepal Investment Bank and Chairman Tulasi Prasad Gautam on behalf of Himalayan Bank.
After the merger, the name of the bank will be Himalayan and Nepal Investment Bank Limited. It has been agreed that Prithvi Bahadur Pandey will be the Chairman of the Board of Directors and Ashok Shamsher Rana will be the Chief Executive Officer of Himalayan Bank. The board of directors of the bank to be formed after the merger will have 3 directors from each bank. The independent director will be appointed by the new board of directors.
It has been agreed that the share swap ratio of both banks will be equal. At present, Nepal Investment has a paid-up capital of Rs 16.26 billion while Himalayan Bank has a paid-up capital of Rs 10.68 billion.
After the merger of the two banks, the paid-up capital will be 26.94 billion. However, after preparing the detailed due diligence report, the bank will get detailed information about the assets and liabilities of both banks. Even if the detailed DDA shows up to 10 percent per share price, there is an internal agreement among the banks to merge in the same proportion.
At present, Nepal Investment has reserves and funds of Rs 14.10 billion and Himalayan has Rs 7.67 billion. In terms of credit investment, Nepal Investment has Rs 160 billion and Himalayan has Rs 127 billion. Similarly, Investment has collected Rs 168 billion and Himalayan Rs 143 billion in deposits. The bank will be the largest in Nepal in terms of paid-up capital, credit investment, and deposit collection.
Indirectly, both Pandey and Rana have cross-holdings in Himalayan and Nepal Investment. Pandey's investment in Himalayan Bank is 8.89 percent owned by Chhaya International. NRB had been emphasizing the merger of these two family-linked banks. Currently, Himalayan Bank has over one percent investment from Habib Bank, Employees Provident Fund, N Trading Company, Mutual Trading Company, Abha International, Chhaya International and Shashikant Agrawal.
Although the NRB has been trying to merge commercial banks for the past few years, so far five commercial banks have merged.
Earlier, commercial banks merged between Commerce and Trust Bank and Global IME Bank, Janata Bank and Global IME Bank, Bank of Asia and Nepal Industrial and Commercial Bank, Lumbini Bank and Bank of Kathmandu and Kist Bank and Grand Bank (now Prabhu Bank).
The merger between the two banks will encourage other banks to merge as well, said Pandey. After the merger of the two banks, the capital of the institution will increase, the scope of work and the working capacity will increase, said the chairpersons of both the banks. The chairpersons of both the banks also expressed their confidence and commitment to provide excellent services and facilities to the customers and give good returns to the investors.
