Nepal Rastra Bank to divest Manakamana Development Bank's promoter share

Nepal Rastra Bank (NRB) is divesting the promoters' share in Manakamana Development Bank Ltd's (formerly known as CSI Development Bank).
The central bank has, according to its own new regulation, started divesting the promoters' shares it has been holding in various financial institutions. The central bank has asked for the quotation from among the promoters of the bank to bid for the 1,60,000-units of promoters' shares within 35 days from September 24.
According to the Securities Board of Nepal (Sebon) regulation, the first priority will be given to other promoters buy the promoters' shares. But a promoter cannot hold more than 15 per cent of the total paid-up capital of a bank, according to NRB's regulation.
"Anyone wishing to buy should deposit 10 per cent of the total amount that they wish to pay for the share," NRB said adding that the bidder should not have been blacklisted and can bid for minimum 500-units and any number that is a multiple of 500 at not less Rs 100 per unit share.
However, if none of the existing promoters wish to buy promoters' shares, these can be sold to the general public.
NRB has allowed class A (commercial banks), B (development banks), C (finance companies) and D (micro-finance companies) financial institutions and banks to reduce their promoters' shares to 51 per cent. According to the new directive of the central bank, 19 per cent of the promoters' shares can be traded in the secondary market like ordinary shares.
The NRB directive states that prospective promoter shareholders should not have been blacklisted by Credit Information Bureau (CIB) and that they should disclose the source of their investment as well.
In line with NRB, Nepal Stock Exchange (Nepse) has also opened separate trading of promoters' shares since last March. Some 38 companies have listed their 61,419,028-unit promoters' shares at Nepse after the secondary market started separate trading since last March 31.
Nepse made the promoters' shares tradeable as the short supply of shares skyrocketed the Nepse index last year to around the 1000-point.
With the new practice, the capital market was expected to be more dynamic and price of the ordinary shares -- that were ballooning then -- was alo expected to stabilise as the supply of shares would increase. Nepse this year has not been able to move above the 900-point mark due to encough supply of shares.

Corporate brand imaging takes effect

Corporate image is something that has slowly started throwing roots in the Nepali psyche.
Two — one operational and another about to be operational — financial institutions have changed their names to spruce up their corporate brand image.
The extra ordinary general meeting (EGM) of Nepal CSI Development Bank yesterday decided to changed its name to Manakamana Development Bank.
It was once taken over by the Nepal Rastra Bank (NRB) for its poor management. Though, it is in profit today it had lost customer confidence due to its mismanagement and controversy over the chairman of the bank — Sitaram Prasai.
The bank has registered a net profit of Rs 113 million in the fiscal year 2008-09. However, the image conscious promoters have changed its name as well as the overall management -- with new promoters including Rajesh Kazi Shrestha -- and promoters’ structure.
The EGM also increased its paid-up capital to Rs 700 million, with new equity investment of Rs 540 million from new promoters. It will soon issue Rs 300 million shares to the public, said the development bank that will have Rs 1 billion paid-up capital after the public issue.
Likewise the proposed-commercial bank Mero Bank which has changed its name to Business Bank. The central bank on September 7 approved Mero Bank’s license allowing it to operate as the 27th commercial bank under the name of Business Bank.
The bank that has the most promoter shareholders in comparison to other commercial banks has 1,228 promoters with Rs 10 million investment.
The bank that has paid-up capital of Rs 2.33 billion and authorised capital of Rs. 4 billion has Rs 1.631 billion paid-up capital of promoters. Accoprding to the bank, it will float Rs 699 million worth primary issue to the public.
Prof Dr Madan Kumar Dahal is the chairman of the co-ordination committee that has Dr Duman Thapa, Prof Dr Govind Nepal, Bhoj Bahadur Shah, Mukti Ram Pandey, Gopal Khanal, Tulsiram Pokharel, Indra Bahadur Malla and other reputed citizens of the country.