Nepal Bank's shares traded at OTC

For the first time in its history, the Nepali stock market has witnessed Over-The-Counter (OTC) trading with de-listed Nepal Bank Ltd (NBL)'s shares.

Today, the bank's 71,928 unit shares belonging to the government were transferred to NBL's 2,664 employees. The OTC trading, being an unorganised secondary market, does not require the involvement of brokers and Nepse only facilitates the transfer.

Though the OTC Regulation 2065 came into existence four years back, so far no shares had been traded under OTC market. The shares of companies that have been de-listed by Nepse, shares of small companies that are unable to meet Nepse’s and Securities Board of Nepal's requirements, and shares of banks and financial institutions that have conducted its initial public offering but have not yet listed at Nepse can be traded over the counter.

Nepse, so far, has de-listed 43 companies and most of the de-listed companies are virtually non-existent, as a result of which their shares are also not in circulation. Nepal Bank, which was de-listed by Nepse in 2004 following the bank's near insolvency state, is also in the process of getting its shares re-listed to bring its restructuring to a conclusion.

The bank's 3.8 million units of shares were listed at Nepse at the time. Its capital was negative by little more than Rs 4 billion in the beginning of the fiscal year. Nepal Bank has already undertaken a recapitalisation plan by issuing rights shares to existing shareholders at a ratio of 1:9.5.

The government, that owns 41 per cent stake in the bank, will be purchasing the rights shares worth Rs 1.37 billion from the rights issue that will be floated in a month. The bank is looking forward to re-list its shares at Nepse as regulation requires the scrip to be actively traded before it can come up with the rights issue.