The plan that was recently tabled to the high-level committee on financial sector headed by the Finance Minister has proposed to bring a major change in the equity structure of the long -troubled NBL. [break]
The first option of the plan has proposed to bring fresh issues totaling 81 percent of the total share equity, while the existing shareholders will hold only 19 percent stake in the bank. The NBL is in need of Rs 8.91 billion worth of additional capital injection to make its net worth positive, along with meeting regulatory capital requirement and minimum paid-up capital requirement.
According to a central bank study, NBL is in need of Rs 1.62 billion to raise its paid-up capital to mandatory Rs 2 billion and another Rs 5.27 billion to make its net worth positive. Likewise, the troubled bank also needs additional Rs 3.64 billion to maintain 10 percent capital adequacy ratio.
As per the plan, existing shareholders, including the government, will not be allowed to raise their equity while majority of the share will be sold to a strategic partner that will hold 51 percent of the equity. General public will hold 25 percent share, while existing non-government partners will be the third largest equity holders with 11.4 percent.
If the plan goes into implementation, the government will hold 7.6 percent share, while the remaining 5 percent will remain with the employees of the NBL. The plan also aims to sell go for fresh issue having face value worth Rs 100 in premium price worth Rs 500.
Likewise, acquiring NLB by one or more Nepali and international banks is the second option that the NRB has floated. As per the plan, a consortium of national and international banks will command 51 percent of the NBL´s equity while general public and employees of the bank will hold 32.6 percent and existing private parties will have remaining 11.4 percent.
In this option also, the fresh issue of 88.6 percent will be sold at premium price of Rs 500 for each unit of shares and the consortium will be allowed to acquire the under-subscribed shares floated for general and employees of the NBL.
In the third option that aims to raise capital of Rs 5 billion, general public will be the largest shareholder with 43.6 percent equity while there will be no single party in majority. Similarly, government will hold additional 32.4 percent equity on top of 7.6 percent it will have in new share structure with present investment volume.
The existing non-government shareholders will get 7.6 percent equity in the new structure as they will not be allowed to make additional investment under this option.
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