Himalayan Bank's AGM rejects merger plan with Nepal Investment Bank

 The annual general meeting of the Himalayan Bank Ltd (HBL) rejected the planned merger between HBL and Nepal Investment Bank Ltd (NIBL), after 10 months.

"The 29th annual general meeting of the bank today rejected the planned merger with Nepal Investment Bank,” confirmed Himalayan Bank chief executive officer Ashoke Rana. "So the merger plan with Nepal Investment Bank has officially ended as of now."

The failure of the merger proposal will, however, hurt the investors as the bank cannot distribute dividends and also cannot expand their networks to increase business. The proposal of merger failed in the AGM as the Employees Provident Fund (EPF) and a group led by Manoj Bahadur Shrestha refused to endorse it. The EPF and Shrestha’s group totals some 36 per cent share in the bank.

Shrestha is a former chairman of Himalayan Bank, and EPF -- the government body -- is the institutional promoter. The central bank, has however, clarified that the banks will not be able to distribute the dividends as a fine for 'the demerger'. 

The two commercial banks had signed a memorandum of understanding (MoU) for the merger last May, committing to completing the merger within two months. But the group led by Shrestha was not happy with the proposal.

"The EPF conducted a separate due diligence audit (DDA) of both the banks after the new government was formed in July, even though the merger committee had already conducted DDA,” according to an investor. "The EPF also rejected the merger plan in view of losses projected for it on the basis of the DDA it has conducted."

The merger committee had agreed to seek approval from the AGM for the merger with Nepal Investment Bank on the basis of 1:1 share swap ratio.

The AGM of Nepal Investment Bank Ltd is scheduled for January 18. Howeverm it also needs have a second thought after the rejection from the Himalayn Bank's annual general meeting. Nepal Investment Bank Ltd that feels betrayed by the new development has called emergency meeting of the board of the bank for Sunday.

The central bank -- that is encouraging the mergers -- had extended the deadline for the completion of merger after they wrote an official letter of intent for merger last June.

The merger of the two big commercial banks has been expected to set a precedent for big mergers in future as thed central bank wanted to reduce the number of banks and financial institutions (BFIs) through 'big mergers' enabling the single bank to invest in large infrastructure projects.

Currently, there are 27 commercial banks in Nepal. The number came down as some of the BFIs have already merged.

Himalayan Bank had decided to pass the merger proposal through voting following differences over the  merger between its promoters. According to the voting result some 42 per cent of the votes came in against the merger proposal following objections expressed by the EPF, N Trading Company and Chhaya International. In order to pass the merger proposal, some 75 per cent shareholders had to approve it.

Himalayan Bank has 14.87 per cent share investment of the EPF, where N Trading Company has 12.77 per cent and Chhaya International has 8.94 per cent stake in the bank. Likewise, Habib Bank of Pakistan has a 20 per cent stake in the bank. It is the largest shareholder in the bank, followed by the EPF.

The board of directors of Himalayan Bank had been divided since the merger agreement was signed with the NIBL. Founding promoters Habib Bank, Mutual Trading Company, Aabha International and Khetan Group are in favour of the merger where EPF, N Trading Company and Chaaya International were against the merger. 

Following the agreement, both the institutions had formally informed the regulatory authority central bank, Nepal Stock Exchange (Nepse), Office of the Company Registrar and Securities Board of Nepal (Sebon) about the merger agreement. Moreover, shares of both the institutions had been been suspended until the integrated transaction is completed. The two institutions had planned to start joint operation from last October 1, last year.

Himalayan Bank Ltd --- established in 1993 in a joint venture with Habib Bank Ltd of Pakistan -- was established by Prithvi Bahadur Pandey, who is currently the chairman of Nepal Investment Bank Ltd. 

Nepal Investment Bank Ltd, earlier Nepal Indosuez Bank Ltd, was established in 1986 as a joint venture between Nepali and French partners. But in 2002, a group of Nepali companies, comprising bankers, professionals, industrialists and businessmen acquired the 50 per cent stakes of the French partner, Credit Agricole Indosuez in Nepal Indosuez Bank, and accordingly the name of the Bank was changed to Nepal Investment Bank Ltd.

ADB creates emergency trade finance facility for Nepal by expanding its Trade Finance Programme

Asian Development Bank (ADB) is expanding its Trade Finance Programme (TFP) in Nepal by an additional $40 million to help banks finance import of much needed goods to support reconstruction and immediate needs in response to the recent earthquake.        
"The emergency facility for Nepal will help remove financial constraints when companies approach their banks to import what they need for emergency assistance, rehabilitation and reconstruction," ADB’s head of Trade Finance Steven Beck said, adding that the impact of the facility can reach $80 million within a year, since trade finance is typically short term and can roll over in less than 180 days.
ADB’s Trade Finance Programme provides guarantees and loans through banks to support trade. The emergency Trade Finance Programme facility for Nepal will be implemented through four Nepali banks – Himalayan Bank, Nabil Bank, Nepal Investment Bank, and NIC Asia Bank – already participants in ADB’s Trade Finance Programme. The facility will prioritise imports of basic commodities – including food and medicine – and needs related to reconstruction, the ADB press note said.
Thousands have died following the earthquake and hundreds of thousands are unable to return home because buildings have collapsed and transport systems, including roads, are unusable. Over two-thirds of Nepal’s 75 districts are thought to have been affected by the earthquake. It will impose a huge economic toll on the country. Preliminary ADB estimates suggest that the economic growth in Nepal may decline to 4.2 per cent for the current fiscal year of 2014-15, compared to the March projection of 4.6 per cent.
ADB has established a Nepal Earthquake Response Team, which along with UN agencies and other development partners will assess the damage and long-term investment needs for reconstruction and rehabilitation.
Support for trade finance will add to the $3 million grant from the Asia-Pacific Disaster Response Fund that ADB is providing for relief efforts and the up to $200 million additional resources for projects in the first phase of rehabilitation.
The Trade Finance Programme helps fill market gaps for trade finance in developing Asia by providing guarantees and loans to banks to support trade. Backed by ADB’s AAA credit rating, the programme works with over 200 partner banks to provide companies throughout Asia and beyond with the financial support they need to engage in import and export activities.
Since 2009, the Trade Finance Programme has supported more than 6,000 small and medium-sized enterprises in about 10,000 transactions valued at over $20 billion in a wide range of sectors, from commodities and capital goods to medical supplies and consumer goods in the region’s most challenging markets.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. In 2014, ADB assistance totaled $22.9 billion, including cofinancing of $9.2 billion.

Himalayan Bank launches Himalayan Bank American Express® Gold Credit Card

Himalayan Bank – one of the leading commercial bank in the country – and American Express joined hands today to launch Himalayan Bank American Express Gold Credit Card in the country.

The card is available in two variants; the Himalayan Bank American Express Gold Credit Card Domestic – for Nepal and India only that offers powerful savings and lifestyle benefits – and the Himalayan Bank American Express Gold Credit Card International – for outside Nepal and India that offers  attractive travel benefits for card members – chief executive of the bank Ashoke Rana said, here today.

The Himalayan Bank American Express Gold Credit Card Domestic offers card members savings of up to 20 per cent on dining and up to 15 per cent on shopping and hotels and spa, he said, adding that card members will also enjoy privileged access to world-class golf facilities in Nepal and complimentary access to Radisson Lounge at International airport in Kathmandu and Altitude lounge in domestic airports in Delhi and Mumbai.

Likewise, the Himalayan Bank American Express Gold Credit Card International offers card members complimentary membership to the Priority Pass programme that gives access to 600 VIP airport lounges around the world.  Card members will also enjoy great savings and discounts on shopping, dining and travel with the American Express Global SELECTS ®.

The card is powered by the American Express Global Assist Services offering card members access to travel medical and legal assistance.

The Himalayan Bank American Express Gold Credit Card is Himalayan Bank’s first American Express-branded credit card products on the American Express network.

Himalayan Bank that claims many firsts in the banking products in the country will be the issuing banking partner for the Himalayan Bank American Express Gold Credit Cards (Domestic and International) and merchant acquirer across the domestic market, Rana added.

The Himalayan Bank American Express Gold Credit Cards will be accepted at more than 900 Himalayan Bank Point of Sale (PoS) terminals and 76 ATMs, he said, adding that the bank is pleased to partner with American Express in Nepal to launch the American Express Gold Credit Cards.

Vice president of Global Merchant Services and Partner Card Services, India and Area Countries at the American Express Banking Corp Pranav Barthwal, on the occasion, shared his delight to be a partner with Himalayan Bank in bring American Express' rich global experience to Nepal. “The expertise, coupled with Himalayan Bank’s local strength will make for a very powerful combination and a superior product that will help us meet surging need of affluent consumers in Nepal,” he said, hoping that American Express Cards will be well received by customers in Nepal.

OMA Emirates partners with Himalayan Bank for fully integrated banking Switch and Card Management System

OMA Emirates — a leading global business solution provider in the Middle East — has announced the launch of its subsidiary OMA Nepal.

With the launch of OMA Nepal, the company based in Dubai brings its wide range of product and service offerings to the financial sector of Nepal, said group chief executive of OMA Emirates Niranj Sangal, here today.

The company provides cutting edge technology solutions in the area of card personalisation, payment issuance and payment acquiring systems through a global delivery platform, he said, adding that the company has provided its service to Himalayan Bank in Nepal.

The pioneer of payment solutions of the Middle East has successfully completed the NanoSwitch for Himalayan Bank.

NanoSwitch is a fully integrated banking Switch and Card Management System (CMS) that is capable of managing ATM and Point of Sales devices and acts as the central interface for all payment and banking activities.

"With our in-house team of qualified and creative software developers, we provide a full fledged and flexible system that takes cognisance of the entire issuance and acquiring requirements of Himalayan Bank," Sangal added. "Moreover, our indigenous solution is highly cost effective from the financial aspect of the project."

"As one of the most prominent banks in the country, we have an ongoing need to modernise our banking systems and lead the way for other financial institutions," said chief executive of Himalayan Bank Ashoke SJB Rana, on the occasion.

"The bank looks forward to a rewarding experience in our partnership with OMA Emirates in creating an indigenous NanoSwitch solution," he said, adding that the complete guidance extended by OMA’s highly skilled professionals and ease of installation met the bank's clear cut requirements. "The implementation of the new system — that cost the bank $300,000 — will be completed by mid-March."

OMA Nepal is dedicated and fully committed to serving the different industries including the banking and finance sector of Nepal, according to the company.

"With OMA Emirates drawing huge success across several markets in the Middle East, Europe and Asian subcontinent, the company looks forward to attaining the same with the launch of its subsidiary OMA Nepal, in the country," it said, adding that OMA also plans to launch a full-fledged support, and Research and Development centre to provide end-to-end service to its customers as it is aiming at providing Business to Consumer services. "Its facility shall also provide support services to East Asian countries."

Bhandari to lead NBA

Chief executive officer of Citizens Bank International Rajan Singh Bhandari was elected as the president of Nepal Bankers' Association (NBA) today. He succeeded chief executive of Himalayan Bank Ashoke Sumsher JB Rana.

Bhandari, who is a former employee of central bank, has been serving Citizens Bank International since its inception in April 2007. Currently, the bank has a network of 14 branches in Kathmandu valley and 18 outside the valley.

According to Nepal Bankers Association's rule, the president and other executive members are elected every alternate year. It has a 13-member executive committee including two vice presidents, eight members and two advisors.

The executives include Upendra Poudel as vice president. After Bhandari, who was vice president, has been elected to president, one vice president's post is vacant, which will be filled in a week. 

Similarly, the other eight executive committee members are chief executive of Nabil Bank Anil Gyawali, chief executive of Janata Bank Bijaya Pant, chief executive of Century Commercial Bank Ganesh Kumar Shrestha, managing director of Kist Bank Kamal Prasad Gnawali, chief executive of Civil Bank Kishore Maharjan, chief executive of Rastriya Banijya Bank Krishna Prasad Sharma, chief executive of Standard Chartered Bank Nepal Joseph Silvanus and chief executive of NIC Bank Sashin Joshi.

Chairman of Nepal Investment Bank Prithivi Bahadur Pande has been nominated as advisor. The post for the other advisor is vacant.

CleanStart programme launched

UN Capital Development Fund (UNCDF) and United Nations Development Programme (UNDP) – jointly launched CleanStart here today

The joint global programme CleanStart seeks to expand access to clean energy for the poor through microfinance and responsive value chains.

It aims to support 600,000 poor households and micro-entrepreneurs to have access to modern energy services through microfinance in the country. It also seeks to build end-user confidence in the reliability of technologies chosen for lending by strengthening supply chains.

The panel discussion, while marking the roll out of the CleanStart programme in Nepal, explored issues around financing access to clean energy for the poor.

Discussions centred on the necessary actions to expand the energy value chain for poor people in Nepal, with a particular focus on the role of finance.

The panel – comprising of executive director of Alternative Energy Promotion Center (AEPC) Govind Raj Pokharel, chief executive of Himalayan Bank and Chairperson of Nepal Banker’s Association (NBA) Ashoke SJB Rana, energy adviser at Royal Norwegian Embassy Bibek Chapagain, assistant country director at UNDP Nepal Vijaya Singh and chief technical advisor at UNCDF Nepal Ana Klincic Andrews – was moderated by UN Resident and Humanitarian Coordinator in Nepal Robert Piper.

“The key drivers to provide access to clean energy are equity and social inclusion and AEPC seeks to rectify regional disparities,” Pokharel said, adding that although this sector receives a subsidy of about €20 million, the subsidy received goes towards ensuring quality of the products and services available and in generating demand among individuals at the bottom of the pyramid. “However it still requires financing for the end-users. Financial institutions therefore need to focus on providing access to energy through financing schemes and products.”
The gap that exists in this sector is close to €30 million to €40 million, he added.

Likewise, Rana explained the challenges that are faced by the banking community as well as financial institutions in providing access to finance to the poor especially relating to transaction costs, a lack of financial literacy among the poor, as well as complying with regulatory issues.

Singh informed the major barriers – policy, systemic and financial – to transitioning to improved services are. “The UNDP has focused on income generation activities to overcome the above mentioned barriers,” he added.
Earlier, chief technical advisor of UNCDF Ana Klinic Andrews explained the nature of the CleanStart programme as part of a global endeavour to bring global commitment made during Rio +20 to the national horizon. She emphasized the four main components – end user financing, technical assistance, knowledge and learning and finally, and advocacy and partnership – of the programme.

Chapagain, on the occasion, emphasised on the importance of the sector and explained the role of the Norwegian government in supporting clean energy as well as access of finance to the poor.

After a session of interactive discussions Piper concluded that CleanStart is the beginning of a long term sustainable effort as yet another global UN strategy to provide access to clean energy for the poor, creating new opportunities for the emergence of a green economy.