Upendra Bahadur Karki, acting CEO of the state-controlled bank, told Republica that the ADBL has already forwarded the name of Pramod Pandey, a chartered accountant, to the Ministry of Finance to finalize the appointment process.[break]
“We are now waiting for the ministry´s response, which will hopefully come within few days,” he said. “Once the consultant is officially hired, the process of divesting shares will gather steam.”
The main responsibility of the consultant would be to liaise with the international consultant who was hired almost two months ago to gather proposals from potential national and international strategic partners. He will also be responsible for auditing the bank´s balance sheet that will eventually be shown to those who want to buy shares of the ADBL.
The ADBL, an ´A´ class bank, has 51 percent stake of the government. Of the remaining 49 percent shares, 30 percent was issued to the public last year, another 14.14 percent was distributed among its debtors in 2007, and 5.86 percent of the shares, which are yet to be distributed, have been allocated for the bank´s staff.
The process of divesting 30 percent more shares is being initiated under the second phase of the Rural Finance Sector Development Cluster launched by the Asian Development Bank (ADB) in 2004.
The Manila-based institutional lender had extended support to the ADBL after the state-controlled bank nearly went bankrupt in 2003 with non-performing loans touching 47 percent of the total lending. Since then the ADB has injected Rs 8.7 billion into the bank as preference shares and has extended technical support by upgrading its IT infrastructure and providing IT related training to the staff members.
In return, ADB had asked ADBL to completely overhaul its governance practices, management structure, business processes and the way it was delivering services.
Since then, the bank´s financial health has also improved, with net profit level touching Rs 1.6 billion last fiscal year.
Although its non-performing loan stood at 8.64 percent till the end of last fiscal year - compared with commercial banks´ average of 2.3 percent - this was down from 10.97 percent of the previous year.
These improvements have restored people´s confidence in the bank which was reflected last year when its initial public offering was oversubscribed by 150 percent.
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