Vibor, Bhajuratna sign MoU for merger

KATHMANDU, JUL 15 -

Vibor Bikas Bank (VBB) and Bhajuratna Finance & Saving Company (BFSC) on Thursday signed a memorandum of understanding (MoU) for merger. VBB Chief Executive Officer Ajay Ghimire and BFSC Director Rup Jyoti signed the pact.

Vibor’s merger was inevitable as the Nepal Rastra Bank (NRB) had offered refinancing on condition that it would opt for merger within three months. The central bank had asked Vibor to come up with a MoU for merger within three months.

After the completion of the merger, the new entity will be known as Vibor Bikas Bank with a paid-up capital of Rs 680 million. As per the MoU, the bank will immediately go for right share issuance to increase its capital to Rs 1.36 billion.

“There will be two different right share issuances for public shareholders and promoter shareholders,” said Ghimire. The ratio of promoter share-to-public share after the rights share issuance will stand at 61:39.

Ghimire termed the merger as Vibor’s vision of consolidating its financial health. “Merger is our necessity as NRB provided refinancing of on condition of merger,” said Ghimire.

Both institutions plan to complete the merger process within six months. They will call a special annual general meeting (AGM) within a month to get the merger plan approved by shareholders.

Jyoti said BFSC was also looking for a partner for merger in order to reorganise its capital structure. “As per the NRB regulation, single family/organisation is not allowed to hold more than 15 percent promoter share in a financial institution,” said Jyoti. “In the context where some of the group’s subsidiaries hold more than 15 percent promoter share, merger was a good idea,” he said.

According to Ghimire, the board of the merged entity will have two members each from Vibor group and Bhajuratna group along with three other board members. There will not be any layoff post merger. “In fact, we’ll be hiring more staff as we’ve expanded our business,” said Ghimire.

NRB had rescued Vibor a month ago when the bank suffered liquidity crisis. Since then, Ghimire claims, banks liquidity position has improved. “We’re moving towards normalcy,” said Ghimire.

Posted on: 2011-07-15 08:52
http://www.ekantipur.com/2011/07/15/business/vibor-bhajuratna-sign-mou-for-merger/337419.html