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2023 will be a year of consolidation in Nepali banking

The Annapurna Express

The Annapurna Express

2023 will be a year of consolidation in Nepali banking

The merger deal between Kumari Bank and NCC Bank, which agreed to a swap ratio of 1:1, received final approval from the central bank in the third week of Dec 2022

With the drive for mergers and acquisitions (M&As) gathering a lot of momentum, 2023 is going to be the year of consolidation in the Nepali banking sector. The first day of the new year saw the successful completion of a merger between two commercial banks, namely Kumari Bank and NCC Bank. On Jan 1, the banks announced unified business transactions as Kumari Bank Limited amid a special function held in Kathmandu.

While 2022 saw Nepali commercial banks either signing M&A agreements, 2023 will see those deals becoming reality.

With Nepal Rastra Bank (NRB) giving its final nod, two more mergers, between Nepal Investment Bank Limited & Mega Bank, and between Global IME Bank & Bank of Kathmandu (BoK), will come to a logical conclusion in the near future.

The merger deal between Kumari Bank and NCC Bank, which agreed to a swap ratio of 1:1, received final approval from the central bank in the third week of Dec 2022. Post-merger, the paid-up capital of Kumari Bank will be Rs 25.85bn while deposits will total Rs 311.34bn and loans will stand at Rs 274.55bn.

Ramesh Raj Aryal has been named the CEO of Kumari Bank who was earlier the CEO of NCC Bank. Ram Chandra Khanal, who was earlier the CEO of Kumari Bank is now Deputy CEO of the new entity formed after the merger.

The central bank’s board meeting on Dec 29 has given the final approval for the merger between Global IME Bank and Bank of Kathmandu. The same meeting also gave final approval for the merger between Nepal Investment Bank and Mega Bank.

However, the Global IME and Bank of Kathmandu will not be able to do integrated business with the name passed by their annual general meetings. The AGMs of both banks had endorsed the resolution that the name of the post-merger entity will be ‘Global IME BOK Limited’. The central bank, however, directed them to come up with a new name, arguing that the proposed name did not have the word ‘bank’ in it.

Now, both banks have agreed to start an integrated business under the name Global IME Bank. After the merger, the Chairman of the merged entity will be Chandra Prasad Dhakal while Ratna Raj Bajracharya, current CEO of Global IME will continue to be the chief executive of the new entity formed after the merger.

Meanwhile, Nepal Investment Bank whose merger effort with Himalayan Bank did not materialize last year, is finally getting it right with Mega Bank. The Nepal Investment-Mega Bank merger will take place with a swap ratio of 1:09. Post-merger, the bank will be known as Nepal Investment Mega Bank with paid-up capital of Rs 34.43bn.

There will be two acquisitions taking place in the banking sector in 2023. The Himalayan Bank is in the process of acquiring Civil Bank while Prabhu Bank is acquiring Century Bank.

The total number of commercial banks that had reached 32 in 2014 will come down to 22 this year if all these mergers and acquisitions materialize.

 

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