Global IME, Janata Bank ink MoU for merger

Two commercial banks – Global IME Bank and Janata Bank Nepal – today decided to merge supporting the central bank’s move for a ‘big’ merger, and also to become the largest bank in the country in terms of capital size.
Global IME Bank and Janata Bank Nepal signed a memorandum of understanding (MoU) today, informed chairman of Global IME Bank Chandra Prasad Dhakal, after the signing ceremony. “We have decided to enter into a merger looking into central bank’s plan,” he said, adding that the new bank will retain the name ‘Global IME’.
The MoU was signed by Dhakal and chairman of the Janata Bank Keshav Rayamajhi, on behalf of their respective banks. They have agreed to name chief executive of Janata Bank Parshuram Kunwar Chhetry as the chief executive of merged entity and Global IME’s acting chief executive Mahesh Dhakal will be his deputy. “The share swap ratio has been set at 1:0.85,” Dhakal added. It means that investors holding 100 unit shares of Janata Bank Nepal will receive 85 unit shares of Global IME post merger. “However, the final swap ratio will be determined after the due diligence audit (DDA) report is finalized,” he said, adding that the management teams of both the banks will finalise all the necessary procedures within four months. ““We will now seek the letter of intent from the Nepal Rastra Bank for the merger, while a committee will work on the DDA simultaneously.”
According to the third quarter report of the current fiscal year 2018-19, the paid-up capital of Global IME and Janata Bank Nepal stands at Rs 10.31 billion and Rs 8.08 billion, respectively. Likewise, the reserves and surplus of Global IME Bank and Janata Bank Nepal stand at Rs 5.12 billion and Rs 1.75 billion, respectively. The joint entity – post merger – will have Rs 18.39 billion paid-up capital. “Likewise, Global IME’s net profit stands at Rs 1.87 billion and Janata Bank’s net profit stands at Rs 1.02 billion.”
 According to the MoU, the board of the joint entity will comprise of five directors from Global IME Bank and two from Janata Bank Nepal.
This will be the second merger for the Global IME Bank at the commercial bank level. Global IME Bank has already completed merger with the then Commerz and Trust Bank, apart from two development banks and two finance companies, and has acquired two development banks.
After the merger, the merged entity could post around Rs 5 billion net profit in the next fiscal year. However, the EPS wil stand at Rs 25.43, and the shareholders of both the banks shareholders will benefit from the proposed merger. 

RBB, NIDC merger talks gathers momentum

The merger process between state-owned Rastriya Banijya Bank (RBB) and NIDC Development Bank has once again gathered speed.
The separate merger committees formed by both the banks have agreed to form a joint merger committee led by joint secretary of the Finance Ministry Nirmal Hari Adhikari.
"We have formed a joint merger committee, which will be responsible for finalising all the merger related issues,” said RBB chief executive officer Kiran Shrestha. "The committee has set a target to finalise the merger process by October 17 this year," he said, adding that the long Dashain vacation in between will surely affect the merger process. "We will do our best to meet the deadline."
Earlier, the individual merger committees formed by the two banks has finalised a first draft of the memorandum of understanding (MoU) yesterday. They have now given the authority to finalise the MoU to the joint merger committee.
The banks have yet not yet discussed into technical issues of the merger like capital ratio and management of employees. "Technical issues are yet to be solved," Shrestha added.
NIDC has already finalised the Due Diligence Audit (DDA) to begin the merger process with RBB. RBB has also already calculated its net worth before starting the merger process.
Expecting merger soon, the Finance Ministry has asked NIDC Development Bank not to extend the agreement of the staffs, who have been hired on contract basis. The ministry has – issuing  a letter on May 7 – also asked NIDC not to appoint any new staff on contract.
A cabinet meeting on January 27 had also urged both the institutions to expedite the merger process. A committee that had been formed under the leadership of former secretary Prithvi Raj Ligal had also suggested NIDC to merge with RBB or to establish itself as an investment bank in collaboration with Hydropower Investment and Development Company.
The RBB has, however, planned to widen its branch network after the merger process is completed. The bank, which already has a presence in 68 districts with a network of 166 branches, has planned to add 43 new branches.
The RBB has paid-up capital of Rs 8.5 billion and NIDC has Rs 650 million.

Government recalls 6 Patanjali products

On the International Yoga day, the government has recalled six products of Yoga Guru Baba Ramdev's Patanjali pharmacy as they failed microbial tests.
The Department of Drug Administration (DDA) – in a public notice – said six Ayurvedic medical products manufactured by Divya Pharmacy in Uttarakhand, were found to be substandard during inspections at various outlets and tests on specimens. The drug authority has recalled six products, Triphala Churna, Adviya Churna and Aswangandha. Amla Churna, Divya Divya Gashar Churna, Bahuchi Churna. All these Patanjali products were manufactured at Divya Pharmacy in Uttarakhand.
"The batch of medicine which was inspected by the department are found to have contained pathogenic bacteria," an official of the Department said, urging the stakeholders not to sell or prescribe the use of these six medicines with immediate effect.
The drug authority has asked the Patanjali Ayurveda unit in Nepal to inform them about steps being taken to recall the products in line with medicine laws.
Earlier, Indian Army has also stopped sale of Patanjali's Amla juice across its canteens, Canteen Stores Department, after it received negative test report on samples it had sent to Food Safety Standards Authority of India laboratory. The 'unsafe' Amla juice exposes defence personnel to certain health risks, according to the reports
Also in 2016, a PIL in Gujarat High Court had sought ban on the sale of shilajeet – a product used to enhance sexual prowess – by Yoga guru Baba Ramdev's Patanjali brand of medicines. The PIL was filed on the ground that selling a product like shilajeet under the brand name of Patanjali, who is a very revered saint for the Hindus, hurts religious sentiments. However, the PIL was withdrawn later.
According to Patanjali Ayurveda Kendra in Kathmandu – the sole distributor of the products in Nepal – the medicines have not been banned but restriction was imposed on the sale and use of certain batch of the medicines that failed lab test. "We will immediately recall the medicines, if found substandard," an official at the Patanjali Ayurveda Kendra said.

Global IME calls special AGM to finalise merger with Commerz and Trust

Global IME Bank has called special annual general meeting on March 4 to endorse the merger with Commerz and Trust Bank Nepal.

The special AGM scheduled to take in Birgunj will endorse the merger with Commerz and Trust Bank by ratifying Due Diligence Audit (DDA) report and finalise the share swap ratio, and convert more than 51 per cent of the bank’s promoter shares into ordinary shares.

The central bank had formally endorsed the merger plan of Global IME Bank and Commerz and Trust Bank, in December.

 The two commercial banks had signed merger agreement on November 10, 2013 and proposed the share swap ration at 100:65.
After the merger between Global IME Bank and Commerz and Trust Bank, it would be the second merger between the commercial banks as the first one was NIC Bank and Bank of Asia Nepal.

Central bank team takes charge of Nepal Share Markets and Finance from today

A three member team of central bank took charge of the Nepal Share markets and Finance from today.

The team led by deputy director Santosh Kumar Ghimire, has assistance directors Kaji Ram Karki and Prakash Shrestha will sell shares or bring in new investors to increase capital, find merger partner, recover the remaining amount – Rs 2.13 billion – by the then executive chairman Yogendra Shrestha, and prepare a report within the six months and submit to the central bank to either run or sent to liquidate the Class C financial institution.

According to the due diligence report (DDA), Shrestha had embezzled Rs 2.68 billion. Shrestha was involved in insider lending against the good governance and prudential norms of banking.

Though late, the central bank's board had taken the decision to take over the board and management of troubled Nepal Share Markets and Finance last Thursday.
According to the regulation, a financial institution that is declared troubled has to be taken over by the central bank, if it does not improve within six months or sent to the liquidation. But the central bank gave it more than enough time to improve.

Central Investigation Bureau (CIB) last year had arrested Shrestha for his involvement in creating fake borrowers and misusing the deposits of the public. He is still in the jail.

Earlier last week, the central bank has taken over the management of the NCC Bank suspending the board due to prolonged dispute among the board of directors.

Likewise, in 2006, the central bank had taken over the Bank of Kathmandu and returned it within three months. However, the central bank has failed to improve the financial health of Gurkha Development Bank – that it has been handling since last two years – and is still managing it.

Government asked to ban import of inferior quality medicine

Pharma entrepreneurs and experts today asked the government and the regulatory agencies to put a stop to free flow of substandard drugs into the country.

Urging the government for stricter monitoring, they also called for a regulatory framework to supervise the rampant imports of inferior medicine that pose great risk to lives of the people.

Addressing the 23^rd anniversary of Deurali-Janta Pharmaceuticals, former director general of Department of Drug Administration (DDA) that looks after the pharmaceutical industry Bhupendra Thapa asked the government to check the free flow of substandard medicines.

With an effective mechanism, the government should keep vigil on imports of drugs, he said, adding that the government should bring foreign drugs imports under the regulatory framework by imposing a small amount of VAT on them. "The drugs do not attract customs duty and VAT, tht has encouraged a massive inflow of inferior quality drugs into the country."

The 47 pharmaceutical companies operating in the country claim to hold 45 per cent of the domestic pharmaceutical market worth Rs 18 billion annually. They also claim to be manufacturing quality products that are cheaper than imports.

"The government should scan the foreign companies exporting medicines to Nepal," Deurali-Janta chief executive officer Hari Bhakta Sharma advised, adding that the government should also conduct a relative test. "The government has to support the private sector in developing innovative products to promote exports, otherwise, the country could not able to generate employment for 280,000 people, who come into market every year."

Deurali-Janta – that was established with an investment of over Rs 900 million 23 years ago – manufactures 210 types of general medicines including drugs for heart problems, nerves, diabetes and skin diseases.

However, the company has been running at only 55 per cent of its capacity that has curtailed its plan to manufacture more innovative products.

Finance Minister Shankar Prasad Koirala, on the occasion, said that the proposed  Industrial Enterprise Act would address many issues related to regulation of businesses including pharmaceuticles industry. "The proposed Act will help resolve the issues and concerns of the private sector and secure their investment."

Stressing the need of prioritising production for making the country self-reliant, he said, accepting that there are problems in the industrial sector. "The Technology Development Fund, which was brought to encourage the industrialists, would be used in consultation with the private sector."

The government is planning to reopen Nepal Drugs, Koirala informed.

The Nepal Drugs has been closed since it was found to have failed to meet Good Manufacturing Practice (GMP) standards set by the United Nation’s World Health Organisation (WHO).

But the government has proposed to resume operations of Nepal Drugs, he said, adding that the proposal is in the cabinet. "The modality for operating the ailing company has, however, not been fixed yet."

Nepse to upgrade trading system

Nepal Stock Exchange (Nepse) claims to be preparing to start internet-based trading of securities, though the trading has been frequently delayed due to technical glitches of the software in recent months.

During the 20th anniversary celebration here today, general manager of Nepse Sitaram Thapaliya claimed that the process to upgrade Nepse has already began. "The upgradation will bring international standard to the Nepse, part from helping reduce risks," he said, adding that Nepse is installing an electronic display board of live trading.

The secondary market that has seen more upward movement these days, has added five new companies in the six months of the current fiscal year 2013-14 making a total of 235 listed companies.

The front line regulator will also start Block Trading Facilities (BTF), prepare dealers and market makers to expand the market, Thapalia said, adding that it is also planning due diligence audit (DDA) also to find out the ground situation of the Nepse.

Likewise, the annual general meeting of Nepse has also approved 2:1 bonus shares worth Rs 100 million, which has increased the paid up capital and issued capital to Rs 300 million from today.

Currently, the Nespe has been providing service to four cities – Biratnagar, Pokhara, Narayangarh and Butwal – through remote work station (RWS). The service will be expanded to Dharan from the current fiscal year, according to the Nepse.

Insurance Board finally suspends NB Insurance business

NB Insurance that has been in news for failing to comply with the regulatory norms have finally been suspended today, according to the insurance market regulator, Insurance Board.

The insurance company that has sold some 6,867 policy in the cuirrent fiscal year 2013-14, has around 900 claims. But after repeatedly bypassing the regulatory directives, the regulator today padlocked the non-life insurer that is promoted by the notorious NB Group.

The central bank had also freezed its accounts some two months ago after the Insurance Board sought the Nepal Rastra Bank's help, as it failed to get its act together despite repeated regulatory calls.

The Insurance Board had asked the central bank to freeze the NB Insurance accounts also because it failed to implement reforms in various sectors despite repeated calls in the last one-and-a-half years.

The insurance company landed in trouble in February 2012 after it's controversial payment of Rs 59 million – paid as house rent without taking regulator's consent – was revealed. The insurance companies are not allowed to make expenses in excess of Rs 2 million without taking the Board's permission. It had also managed to siphon off over Rs 70 million from the reserve.

Earlier to the Board had suspended the operating licence of NB Insurance for two months in July 2012. But the company instead of improving its past mistakes and ensure good corporate governance, went on making new mistakes.

The non-life insurance company has also not renewed, and has deposited Rs 35.30 million in the crisis-hit World Merchant Bank and Finance that is under central bank scanner. The Nepse-listed insurance company has also not increased it paid up capital to Rs 250 million, according to the regulatory requirement and still has only Rs 141 million paid up capital. It has incurred a loss of Rs 44 million last fiscal year. NB Insurance per unit Rs 100 paid up share was traded at Rs 80 at the Nespe also due to its suspicious transactions.

In October, the Board had also asked the troubled NB Insurance to get its Due Diligence Audit (DDA) to get its real financial picture.