Monday, March 19, 2012

Vibor, Bhajuratna merger by fiscal year end

The merger process of Vibor Bikas Bank and Bhajuratna Finance and Savings is going to complete within this fiscal year.
"We are planning to operate as a merged entity within this fiscal year," said chief executive of Vibor Bikas Bank Ajaya Ghimire."After the central bank's Letter of Intent (LoI) last week, the merger of Vibor Development Bank and Bhajuratna Finance and Savings has gathered momentum," he said, adding that the merged entity will be called Vibor Bikas Bank.
The merger will help Vibor to channel its energy towards more innovation and growth and also make one of the oldest business group in the country — Jyoti Group — more visible in the financial sector.
The development bank that faced an acute cash crunch last year has come out of its crisis currently, he said, adding that it has paid central bank and other banks and financial institutions back and is secure now, Ghimire, added.
"However, we will be looking for more partners to merge as the more stronger capital base will give Vibor more room for growth," he said, without elaborating on its prospective partners. "We are talking to many informally."
The merged entity will have a paid-up capital of Rs 1.36 billion, Ghimire said, adding that it will also raise additional Rs 208.9 million by inducting new strategic partners and merging with other institutions.
The structure of the new board of directors in the merged entity will have two directors each from Vibor and general share holders, one each from Bhajuratna and other merger or strategic partner entity, and one independent director. The bank is planning to maintain 61:39 promoter-public share ratio after merger or rights offerings.
"We remained on a low profile due to central bank's changed regulatory norms, but merger with Vibor will help us grow now," director of Bhajuratna Dr Roop Jyoti said, adding that the merger is a win-win proposition.
Vibor has listed 6,800,000 unit shares with a face value of Rs 100 per unit in Nepal Stock Exchange and its share was traded at Rs 112 on December 12, 2011, whereas Bhajuratna Finance and Saving has listed 561,602 units of shares at a face value of Rs 100 and it was last traded at Rs 116 on November 27, 2011.
Vibor was forced to merge with Bhajuratna after it was unable to repay the depositors due to cash crunch. The central bank while offering it a rescue package of Rs 500 million under 'lender of last resort' facility, has also made it commit on merger.

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