Global IME Bank, Bank of Kathmandu sign final pact to merge

Global IME Bank and Bank of Kathmandu (BoK) today signed a final memorandum of understanding for a merger.

Global IME Bank chairman Chandra Prasad Dhakal and BoK chairman Prakash Shrestha signed the final memorandum of understanding (MoU) for the merger amidst a programme in Kathmandu today.

After signing ceremony, Dhakal said large banks are need of the hour to invest in big infrastructure projects. Likewise, Shrestha said that big and capable banks are needed for economic transformation.

After the merger, the bank will become the largest commercial bank in Nepal with a total capital of Rs 57 billion, according to a press note issued by the banks. “The merged bank’s paid-up capital will reach Rs 35.77 billion with a total deposits of Rs 400 billion and loans of Rs 379 billion.”

Earlier, the board of directors (BoD) of both the banks had approved the share swap ratio of 1:1, based on the evaluation report of movable and immovable assets, liabilities and transactions received from the appraiser for the purpose of merger between the two banks. 

According to the press note, the name of the merged bank will be Global IME BoK, and the bank will consist of seven board of directors – five five from Global IME Bank including its chairman Dhakal. There will be two board of directors on behalf of Bank of Kathmandu. “The incumbent chief executive officer (CEO) of Global IME Bank Ratnaraj Bajracharya will remain as the chief executive officer of the merged bank. 

After the merger, Global IME BoK will have 385 branch offices, 367 ATM counters, 275 branchless banking services, 61 extended branch offices and 3 foreign contact offices, the press note reads, adding that the merged entity will have more than 4 million customers.

Supreme Court orders Shrestha’s release on bail

The Supreme Court (SC) today ordered Nepal Police to release former chief executive officer (CEO) of Bank of Kathmandu (BoK) Ajaya Shrestha on bail of Rs 10 million.
The double bench of SC Justices Sapana Pradhan Malla and Kumar Regmi ordered the release of the banker scrapping the order of Patan High Court to keep him in the police custody. According to Supreme Court, Shrestha will be released after the bail amount will be deposited. Shrestha had registered a writ against the decision of Patan High Court at the Supreme Court.
Nepal Police – on September 22 – had arrested Shrestha and 10 others in a banking offence case worth millions. The Central Investigation Bureau (CIB) of Nepal Police had arrested five bankers of BoK and six others over BoK issuing loans based on fake collateral and forged documents produced by loan applicants.
Surendra Shrestha of Jhapa had – in 2015 – acquired loan worth Rs 500 million from Bank of Kathmandu. The bank started an investigation after Shrestha did not pay back the loan. During the investigation, the bank uncovered that the loan amount was issued on the basis of fake land registration document. It was also revealed that the loan was issued on the basis of fake documents of land situated close to a river in Jhapa.
The bank then went to CIB and registered the complaints, and 11 bankers including Ajaya Shrestha were arrested. Nepal Bankers’ Association (NBA) has criticized the arrest of Shrestha, who is regarded as one of the most humble bankers in the banking community.

Police arrest former BoK chief executive Shrestha on charge of banking offence

Police arrested former chief executive officer of Bank of Kathmandu (BoK) Ajaya Shrestha and ten others on the charge of banking offence. The CIB has also arrested debtor Surendra Shrestha, confirmed CIB spokesperson Bel Bahadur Pandey.
Central Investigation Bureau (CIB) under Nepal Police arrested former chief executive officer Shrestha, bank staffers Kiran Bohara, Richa Shrestha, Sushma Shah, Pushparaj Bhandari, Bikram Panta and among others – from various places on different dates recently – for alleged banking offence.
The bank officials are accused of issuing a bank loan of worth Rs 45 million to the debtors based on the forged documents produced by debtors, he said, adding that the bank officials are accused of facilitating the illegal transaction to purchase land in Kathmandu. 
The aforementioned individuals were arrested, according to the Pandey.
Of the detainees, two are former staffers of the bank, while three are incumbent staffers, the CIB informed, adding that the preliminary investigation has revealed that the debtors created fake land registration certificates to avail the loan from Bank of Kathmandu. “Later on, the debtors produced it as collateral to acquire the loan.”
The bankers have but shown serious concern on Shrestha's arrest as Shrestha is known as a gentleman banker among his fraternity.

Himalayan Bank, Bank of Kathmandu may get their guarantee money back soon

Himalayan Bank Ltd (HBL) and Bank of Kathmandu (BoK) might get their guarantee amount against the Chinese company back soon as a Chinese high court has today decided to review the earlier district court decision.
Henan Province’s People’s High Court ordered the review of the February 15 decision of district-level Zhengzhou Intermediate Court – in favour of China Construction Bank (CCB) – for which HBL and BoK had given counter guarantee in the Melamchi Drinking Water Project.
Himalayan Bank said that the decision of the Chinese high court to review the case is a positive step, and it is optimistic about receiving the counter guarantee amount soon.
Earlier on February 15, the Zhengzhou Intermediate Court had decided in favour of the Chinese contractor in the lawsuit filed against China Railway 15 Bureau, citing violation of underlying contract between China Railway and Melamchi Drinking Water Project.
HBL had issued $6.665 million as performance guarantee, while BoK had issued $6.2 million and 1.40 million euros as advance payment guarantee to Melamchi Water Development Board to provide the counter guarantee to CCB. The CCB was the guarantor for the project contractor China Railway 15 Bureau Group.
According to the international law, the guarantee provided to both Nepali banks by CCB is an independent and unconditional obligation. The bank should receive the money back from China as per the international law and practice, but the Chinese company has been delaying due to court procedure.
The China Railway 15 Bureau Group had been contracted to build a 27-km-long tunnel for the Melamchi project, before appointing the Italian contractor Cooperativa Muratori and Cementisti di Ravenna.
The agreement between Melamchi Drinking Water Project and China Railway 15 Bureau Group was cancelled after the Chinese contractor demanded more funds than agreed in the bid document to complete the work after missing the completion deadline.

Bank of Korea to help NRB prepare model for economic forecasting

Central banks of Nepal and South Korea have signed a Memorendum of Understanding (MoU) for knowledge partnership programme including development of an economic forecast model.
The agreement was signed between NRB director Prakash Kumar Shrestha and deputy director general of Bank of Korea (BoK) Jong Suk Won for knowledge partnership programme between the two central banks amid a ceremony held in Kathmandu today.
The partnership would enable the Nepal Rastra Bank in the development of macroeconomic model for economic forecasts for Nepal. The model will be developed within a year.
According to executive director of the NRB Nara Bahadur Thapa, the partnership between the two central banks would help central bankers and policy makers of Nepal to develop macroeconomic model for economic forecasting as well as enhance the analytical capacity for policy making
"The practice of economic forecasting model and policy stimulation in Nepal is still at a rudimentary stage," he said, adding that the partnership of the NRB with the South Korean central bank would help NRB in enhancing the efficiency of its staffers in building capacity in macroeconomic model for economic forecasting.
After signing the MoU, deputy director general at the International Affairs Department of the BoK Jong Suk Won said that the South Korean central bank expects to prepare and handover the macroeconomic model for Nepal by 2017. "We will prepare a suitable and simple model for economic forecasting for the NRB with support of researchers from Yonsei University in South Korea,” he added.
South Korea has been helping Nepal in various sectors including hydropower, road, infrastructure, health and science since the two countries established diplomatic ties in 1969. South Korea is the fourth biggest source country for foreign direct investment of Nepal in the current fiscal year. Nepal received $104 million in 317 different projects – mainly in service and tourism industry – foreign direct investment, according to central bank data.
In the agreement signing programme, BoK also informed that they will take support of the research consultants from Yonsei University of Korea to develop the economic forecasting model for NRB.