KATHMANDU, Dec 29: Three commercial banks are seeking mergers with other financial institutions of a similar nature. The annual general meetings (AGM) of the three banks recently approved their unification with other financial entities.
Nabil Bank, Prime Bank and Citizens Bank International are among those financial institutions that have left open their options for going into merger. This is expected to give momentum to the merger of the big banks, which has remained on hold for a long time.
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The Nabil Bank’s AGM held on December 12 decided to delegate authority to its board to take forward the agreements for merger and acquisition or to bring in foreign strategic partners. In case if it is necessary, the board can appoint a valuator to carry out financial assessments of the bank’s fixed and movable assets and liabilities, according to the decision of the AGM of Nabil Bank.
Likewise, Prime Bank’s AGM on December 4 also gave the go ahead to its board to take forward the process of merger and acquisition with other banks and financial institutions (BFIs). Similarly, the AGM of Citizens Bank International that took place on October 29 also approved the proposal of merger and acquisition and allowed the board to make agreement with recognized valuators to carry out the process of unification.
The Nepal Rastra Bank (NRB) introduced Merger Bylaws in 2011, while it started pressing the BFIs into merger in the fiscal year 2016/17. Over the period, 239 BFIs opted for merger or acquisition.
At one time, the number of commercial banks in Nepal had reached 33. After the NRB asked the banks to increase their paid-up capital, commercial banks have unified and the number has decreased to 20.
Due to the merger drive, a number of development banks have also dropped to 17 from 88. Likewise, there are now 17 finance companies and 64 microfinance companies, each of which used to count over hundreds in their number before the merger.
The merger between NIC Bank and Bank of Asia in 2013 was the first big merger between commercial banks. The NRB, in order to give momentum to big mergers of commercial banks, last year announced additional benefits to the unified entity.
Former NRB Governor Chiranjeevi Nepal said the central bank facilitated the merger of the BFIs citing to protect the long-term interest of the country while maintaining security of banks and depositors. According to him, 12 to 15 commercial banks would be enough for Nepal considering the size of the economy of the country.
