Simrik Air leases entire fleet of Agni Air

Simrik Airlines from today officially started operations to Lukla with 17-seater Dornier 228 aircraft leased from Agni Air as it has leased the entire fleet of five aircraft from the debt ridden Agni Air.

"Simrik Airlines leased five aircraft of Agni Air after signing a tripartite five-year lease agreement between Agni Air, Simrik Airlines and a consortium of banks led by Grand Bank Nepal,” said executive director of Simrik Airlines Captain Rameshwor Thapa, without giving any details of the lease agreement.

The initiative might help Agni Air revive and prevent it from complete collapse as Simrik Airlines is now liable to repay loans worth Rs 570 million with interest borrowed by Agni Air from Grand Bank. Simrik will also have to repay loans of Rs 150 million to Rs 200 million acquired under consortium financing from two other financial institutions.
According to the agreement, Simrik Air will have to share the profit earned through the operation of the leased aircraft with Agni Air that had started for looking potential buyers after it suffered from worsening financial health due to huge bank loans and staff payment dues.

Grand Bank, along with Sunrise Bank and International Leasing and Finance Company, had financed Agni Air but the airlines failed to repay loans worth more than Rs 600 million to the banks due to the airlines key promoter Sudhir Basnet's huge real estate exposure.

Simrik Airlines will operate Agni's another Dornier aircraft after three months and in next three months, the company plans to operate all the three remaining Jet Stream aircraft, according to the agreement that stated that once the lease agreement expires, the aircraft will be returned to Agni Air.

Though the aviation market has high demand of aircraft, the domestic airlines have not been able to fulfill it,” said chief executive of Grand Bank Sudhir Babu Khatri. He hoped that the lease agreement will create a win-win situation for both the banks and the airlines.
Agni Air had started operations in 2006 with three Jet Stream and two Dornier aircraft, whereas Simrik Airlines had started regular flights with Beechcraft 1900 in February 2013.
At present, Simrik operates flights on Pokhara, Bhairahawa, and Simara routes and with today leased Dornier 228 aircraft it has extended flights on Lukla route, whereas Agni grounded all its aircraft after its failure to pay bank loan.

Police arrests Sudhir Basnet

Police today evening arrested builder and Agni Air promoter Sudhir Basnet on charges of fraud.
"We have arrested Basnet from Tinkune in Kathmandu on complaints from his nine clients, whom he promised flats in his apartments being promoted by him," confirmed a police officer from Metropolitan Police Crime Division, Hanuman Dhoka.
Basnet, who had promised flats to around 1,000 people in 10 of his housing projects like Oriental Apartments, Kohinoor Housing  and Eastern Apartments, was unable to deliver due to slowdown in housing business and lack of cash flow to complete construction of the apartments.
Basnet, who had also been blacklisted by the Credit Information Bureau (CIB) as he was unable to pay loan to the banks, also have to pay over billions to Oriental Cooperatives' depositors, who have been making rounds of his office since last couple of months.
He had invested depositors’ money from Oriental Cooperatives to the housing projects against the cooperatives and central bank's banking regulation.
Likewise, three banks and financial institutions have yesterday put Agni Air, owned by him, for auction as the airlines failed to meet the loan repayment deadline that was December end. They issued a seven-day auction notice yesterday for the sale of Agni Air’s five aircraft — three Jetstream 41s and two Dorniers — their spare parts and land plots in Bhaktapur.
Grand Bank, Sunrise Bank and International Leasing and Finance Company have lent the airlines Rs 650 million. But it failed to repay loan by deadline.

Basnet has however, around Rs 4 billion loan from different banks and financial institutions.

Gurans Life ordinary shares oversubscribed by four times

Guras Life Insurance's primary issue has been oversubscribed by four times to Rs 427.49 million.
The insurance company had floated Rs 108 million worth 10,80,000-unit of ordinary shares at the face value of Rs 100 per unit for the public from November 19 to 23. The issue manager NMB Capital closed the issue on Tuesday after it was oversubscribed.
"Some 49,534 people -- excluding the staff -- applied for 4.27 million-unit of shares," said Sunil Devkota, chief executive office of the life insurance company that is promoted by 17 promoters including Sunrise Bank, T M Dugar Group and a group of diverse businessmen, industrialist and legal professionals.
Despite the poor performance of the secondary market at present, the four fold subscription of the ordinary shares makes it clear that the public still hs faith in the primary issue.
With this primary issue worth Rs 108 million, Guras Life Insurance has now paid up capital of Rs 360 million.
However, life insurance companies have to raise their paid up capital to Rs 500 million by July 15, 2013, according to the Beema Samiti (Insurance Board) directive.
"We are going to increase our paid up capital to Rs 500 in next two year by issuing rights and bonus shares," he said.
There are nine life insurance companies and 16 non-life insurance companies making it to a total of 25 insurance companies in the domestic insurance sector. However, Rastriya Beema Sansthan is life-and non-life both facility.
The 34,092,725-unit shares of 20 insurance companies with a paid up value of Rs 3,409,272,500 are listed in the Nepse under the insurance sub-group that is one of the key players in the secondary market.
Though the insurance market is huge, there is a shortage of technical manpower, besides lack of awareness and education about the insurance in the domestic market.

Nepse lists over four million-unit shares

Nepse added 4.1 million unit of shares including rights, ordinary and bonus of Sunrise Bank, Sahayogi Bikas Bank and Nepal Finance during the last week before the festival of Tihar.

The secondary market saw 6883 transactions of 102 companies worth Rs 124.53 million that is 8.75 per cent higher than a week ago. Similarly, the domination of the Class-A companies in the Nepse has come down to 39.56 per cent as they saw Rs 49.2 million transation only.

However, the Nepse could not perform any better than a week ago as the Nepse gained only 0.06 point to close the market at 424.96 points from the Sunday morning's opening of 424.90 points. The sensetive index gained 0.27 point to close at 104.19 points.

Commercial banks, insurance and finance sub-groups surged but hydropower and development banks lost, whereas manufacturing, hotels, and trading groups didnot witness any changes in their indices, according to the Nepse.

Merchant Finance topped the chart with the highest transation amount and share units that saw Rs 17.5 million worth trading of its 906-unit of shares. Similarly, Agriculture Development Bank Nepal topped the chart with 906 trading.

According to the central bank, the year on year (y-o-y) Nepse has declined by 35.6 per cent to 404.43 points in mid September. It stood at 628.34 points in the same period last year.

Similarly, sensitive index (based on July 2006) stood at 98.94 point in mid September against 160.79 points in the same period last year. The float index -- calculated on the basis of closing price of August 24, 2008, as base market value -- remained at 37.15 in mid September, a contraction of 37.8 per cent compared to the same period last year.

The y-o-y market capitalisation also decreased by 25 per cent to Rs 330 billion in the first two months of the current fiscal year. "The ratio of market capitalisation to GDP stood at 28 per cent," the central bank said, adding that the ratio was 45.9 per cent in the same period last year.

Of the total market capitalisation, bank and financial institutions stood with highest share of 71.5 per cent followed by manufacturing and processing companies (2.4 per cent), hotels (1.6 per cent), business entities (0.5 per cent), hydropower (4.8 per cent) and other economic sectors (19.3 per cent).

Total paid up capital of the listed companies stood at Rs 86.34 billion in mid September -- an increase of 35.6 per cent over the period of one year. This increase was largely due to the additional listing of securities at the Nepse.

As at mid September, Nepse listed securities worth Rs 12.39 billion (ordinary share of Rs 4.62 billion, bonus share of Rs 226.5 million, right share of Rs 2.56 billion and government securities of Rs 4.99 billion). The total number of listed companies stood at 180 in mid September compared to 159 in the same period last year. Among them, 148 are banks and financial institutions (including insurance companies), followed by 18 production and processing industries, four hotels, business entities and hydropower companies each and two companies under other groups.

Commercial banks, hydro companies propel Nepse

The share holders of commercial banks and hydropower companies gained today as except for the two sub groups all others lost.

The banks sub group propelled the secondary market by 3.84 points to close at 486.6 points after it saw heavy trading in some of the commercial banks. Sunrise Bank (12,340-unit), Lumbini Bank (5,379-unit), Bank of Kathmandu (4,268-unit), Prime Commercial Bank (3,343-unit), Nepal Investment Bank (2,879-unit), NIC Bank (2,255-unit), Kumari Bank (1,469-unit) and Laxmi Bank (1,104-unit) pushed the banking index up by 5.94 points to close the banks sub group at 468.92 points.

Similarly, Butwal Hydropower (2,196-unit) and Arun Valley Hydropower (1,294-unit) along with Chilime Hydropower (400-unit) shares were traded at the market, pushing the sub group by 2.04 points to 726.13 points.

However, the Asian Life Insurance that saw 6,220-unit of its shares being traded could not lift the insurance sub group as the sub group lost 0.37 point to close at 569.58 points.

Meanwhile, the year on year (y-o-y) Nepse index declined by 32.74 per cent to 444.76 points in the nine months of 2009-10. The index stood at 661.27 in the same period last year.

Likewise, Nepse sensitive index (based on July 2006) stood at 108.65 points in mid April, which was 176.17 points in the same period last year.

The float index -- calculated on the basis of final transaction as of August 24, 2008 as base market value -- remained at 41.88 in mid-April, a contraction of 35.15 per cent compared to the same period last year, according to the central bank's data.

The y-o-y market capitalisation also declined by 18.21 per cent to Rs 344 billion in mid-April. The ratio of market capitalisation to GDP stood at 31.80 per cent, said the central bank. "It was 43.87 per cent in the same period last year."

Of the total market capitalisation, bank and financial institutions accounted for 74 per cent followed by manufacturing and processing companies (1.8 per cent), hotels (1.1 per cent), business entities (0.3 per cent), hydropower (four per cent) and other economic sectors (18.7 per cent).

Total paid up capital of the listed companies stood at Rs 74.26 billion in mid-April -- an increase of 35.82 per cent over a period of one year. The increase was largely due to the additional listing of securities at the secondary market.

In the ninth month of current fiscal, additional securities worth Rs 20.15 billion -- ordinary share of Rs 3.59 billion, bonus share of Rs 3.43 billion, right share of Rs 5.96 billion and government securities of Rs 7.25 billion -- were listed at the Nepse.

The total number of companies listed at the Nepse has increased to 168 in mid-April compared to 157 in the same period last year.

Arun valley increases paid up capital

KATHMANDU: As per the decision of 14th AGM of Arun Valley Hydropower Development Company on December 29, 2009, the company has distributed 40 per cent of the paid up capital that is 686,000-unitbonus shares. The bonus share has been listed on the Nepse on June 9. After the bonus shares, the total paid up capital of the company is Rs 240.1 million. The company is also making a detailed study for a proposed hydro power project at Kabeli B-1, with a capacity of 25 MW. -- HNS

Nepse plunges, investors nervous

Nepse this week plunged by 22.94 points to close at 578.19 points from Sunday morning's opening of 601.13 points.
Psycological pressure of book closures, fresh supply of stocks, financial institutions margin call -- due to continuous decrease in price of shares -- made investors more nervous forcing them to exit from the market.
In comparision to the new listing, the number of investors did not increase giving some smart investors a chance to sell off their shares at the current price and buy at a much lower price afterwards as according to them, the secondary market index is expected to drop further.
This week itself, primary shares of Sunrise Bank (12.5-million-units), Prime Comercial Bank (10-million-units), Vibor Bikas Bank (6.8-million-units) and rights shares of Civil Merchant Bittiya Sanstha (4,99,270-units), People's Finance (666962-units), Pokhara Finance (12,720-units), Narayani Development Bank (99884-units) and Nirdhan Utthan Bank (20,9936-units) were listed at Nepal Stock Exchange, making the total number of listed shares over 928.72-million-units, including promoters' shares, corporate debentures, bonds, preferred shares and mutual funds.
Of the total 26 commercial banks, Nepse has 23 commercial banks (with over 281.56-million-unit shares) under its banks sub-group that is the key player in the domestic market. Of the remaining three commercial banks, Nepal Bank Ltd has been delisted, Agricuture Development Bank is floating its shares worth Rs 960 million soon and Rastriya Banijya Bank is a complete government undertaking.
Thirty 30 development banks are listed at Nepse in the development banks sub-group with a total of over 66.34-million-unit shares. Sixty-two finance companies are listed at Nepse with 81,932,204-unit shares.
Though there are 18 companies in the manufacturing sub-group, the sub-group is the least traded and the weakest player in the domestic secondary market unlike the global secondary market practice.
Market pandits think that the institutional investor is the need of the hour as the existing investors are unable to hold the fresh supply of shares. Apart from the nervousness of current investors, the continuous bearish trend has repelled new investors from the secondary market as the major market player -- commercial banks sub-group -- this week also lost a whopping 34.69 points to close at 552.19 points from Sunday morning's opening of 586.88 points.
Bank of Kathmandu topped the chart in terms of transaction this week with Rs 31.19 million followed by Kist Bank with Rs 27.59 million, Nepal SBI Bank with Rs 26.20 million, Standard Chartered Bank Nepal with Rs 20.57 million and Nabil Bank with Rs 14.70 million.
In terms of number of share units traded this week, Kist Bank dominated the secondary market with its 76,000-unit of shares changing hands. Pashupati Development Bank topped the chart in terms of transaction number with 566 tradings in its kitty.
During the five-day session, 95 companies saw their shares being traded. The contribution of Group-A companies increased to 64.48 per cent against last week's 56.48 per cent while the 78-scrip sensitive index -- a barometer of Group-A companies -- also lost 7.20 points to drop to 144.57 from Sunday morning's opening of 151.77 points.
The float index -- calculated on the basis of real transactions -- also dropped by 1.22 points to slide to 56.26 points from its opening of 57.48 points.

Nepse flooded, lists 29.3-m-unit shares in a day

The secondary market is flooded with shares as today on a single day it listed 29.3-million-unit of primary shares of three financial institutions -- two commercial banks and one development bank.
Sunrise Bank and Prime Commercial Bank listed their 12.5-million-unit and 10-million-unit primary shares whereas Vibor Bikas Bank listed its 6.8-million unit primary shares.
With the three new financial institutions, the number of listed companies has also gone upto 163 in Nepal Stock Exchange (Nepse) with 697.76-million-unit of shares including primary, bonus, rights and promoters. According to Nespe, with the two additions, there are 23 commercial banks in banks subgroup -- the key market propeller. The 23 commercial banks have listed 281.56-million-unit shares.
Similarly, with one new entrance in the development banks sub-group the number of listed development banks has touched 30.
"Vibor Bikas Bank floated 26,52,000-unit shares worth Rs 265.20 million on June 10 for the public including its staff. It listed a total of 6.8 million-unit shares worth Rs 680 million including 41,48,000-unit promoter shares today.
The 30 development banks have listed 66.34-million-unit shares at Nepse that is dominated by banks and financial institutions. They have over 85 per cent of the total trading.
According to the rule, shares of listed companies will be traded after a week of listing. Thus, these three financial institutions will see their trading next week.

Nepse dropping
KATHMANDU: Nepse on Tuesday lost 4.89 points to close the day at 590.44 points. The single loser -- Everest Bank -- lost Rs 116 per unit share pulling the banks sub-group down by 8.03 points to 571.23 points. The secondary market saw 93,511-unit shares getting traded on the third day this week. On the second day, Nepse dropped by 4.1 points to close at 595.33 points. All the key market propellers -- commercial banks, development banks, finance companies, and hydropower companies -- plunged, pulling Nepse down. Standard Chartered Bank Nepal and Nabil bank -- considered blue chip shares in the domestic market -- lost Rs 60 and Rs 37 per unit on Monday pulling the banks index down by 6.58 points to 579.26 points. The only sub-group that gained was trading sub-group. Bishal Bazar Co Ltd pushed the index of the trading sub-group by 4.8 points to 261.21 points as its 10-unit of shares were traded at Rs 2,860 -- Rs 56 per unit more than the last closing.

Banks, hydropower firm ink accord

Ankhukhola Hydropower Company has signed an agreement with six banks and financial institutions that will see Rs 700 million lent to the hydel project that aims to start electricity generation by June 2010.
A consortium of four commercial banks -- Prime Commercial Bank, Machhapuchchhre Bank, Sunrise Bank and Kist Bank led by Prime Commercial Bank; one development bank -- Kasthamandap Development Bank and a finance company -- Standard Finance -- have signed the agreement to lend the seven megawatt (MW) Ankhukhola Hydropower Project that has already finished 30 per cent of its preliminary work.
The hydel project estimated to cost around Rs 1006 million has been financed up to Rs 230 million by Prime Commercial Bank, Rs 170 million by Machhapuchchhre Bank, Rs 100 million each from Sunrise Bank and Kist Bank, and Rs 50 million each from Kasthamandap Development Bank and Standard Finance, making it a total of Rs 700 million. The promoters of the hydropower company will bear 30 per cent of the total estimated cost.
For hydropower projects, financial management is one of the key issues. However, domestic banks are slowly finding it more confortable to fund hydropower projects. Consortium leader Prime Commercial Bank has lent Rs 270 million to Mai Khola Hydropower also as it is one of the most lucrative investments.
A consortium of eight banks and financial institutions -- led by Citizens' Bank International -- has lent moeny to the 10 MW Lower Modi hydel project recently.
"Ankhukhola hydel project has 15.66 per cent internal rate of returns," Bishwonath Kadel, executive director of the hydel company, said adding that the payback period of the project is estimated at six years and two months.
D B Bamjan, chairman of the hydropower company, that has a 7 MW installed capacity said that the company has already done Power Purchase Agreement (PPA) on June 4, 2009 after it got the survey licence on July 31, 2008.
Located in Dhading, a district neighbouring Kathmandu, Ankhu Khola is one of the major tributaries of Budhi Gandaki. "With complete indigenous technology, the hydro power company shall generate average annual energy up to 39.265 GWh," he said adding that the generated electricity will be connected to the national grid through Nepal Electricity Authority (NEA) sub-station in Dhading Besi.
According to the PPA, NEA will buy the electricity generated by Ankhukhola Hydropower Company at Rs 7 per unit in dry season and Rs 4 per unit in wet season.

Eighth Monetary Policy walks tightrope

Policy reintroduces SLR after 17 years, hopes to contain price hike at seven per cent

Recognising the high inflationary pressure, Nepal Rastra Bank (NRB) today announced a cautious and tight Monetary Policy for the fiscal year 2009-10.
"It is believed the policy will contribute to the prudent macroeconomic management, consolidation of the financial and external sectors and secured internal payments system to create a conducive economic environment for higher growth," said NRB governor Deependra Bahadur Kshetry, unveiling the eighth Monetary Policy.
"The existing liquidity overhang in the economy is sufficient to facilitate economic growth of 5.5 per cent," Kshetry said adding that the policy also envisions containing inflation at seven per cent. However, the Monetary Policy -- in the last fiscal year also -- failed to contain the price hike and it is still doubted whether it will fuel growth and contain the price hike.
The policy has reintroduced Statutory Liquidity Ratio (SLR) after one-and-a-half decades to contain inflation and fuel growth.SLR is commonly used to contain inflation and fuel growth by increasing or decreasing it, respectively. This counteracts by decreasing or increasing the money supply in the system. The commercial banks, development banks and finance companies are now required to invest in government securities six per cent, two per cent and one per cent of their total deposit mobilisation by second quarter, respectively and which will be increased to eight, three and two per cent respectively by the end of the fourth quarter.
"The old banks already have invested in government bonds and securities over the limit fixed by the policy," said Anil Shah, vice-president of Nepal Bankers' Association (NBA) and CEO of Nabil Bank. "However, the new banks will feel the heat and it might put pressure on lending rates," he added.
Kishore Maharjan, CEO of Sunrise Bank agreed with Shah. "Lending rates may go up," he said.
Though the limit of paid-up capital is unchanged, the policy has made capital fund the main barometer of any financial institution. Apart from that, it has also opened the borders for domestic banks. They can now open branches outside the country.
"The policy is flexible and can be adjusted according to the situation anytime," governor Kshetry said. It has not changed any major rate like Cash Reserve Ratio (CRR), refinancing rates or the bank rate.

SLR versus CRR
KATHMANDU: What Statutory Liquidity Ratio (SLR) does is it restricts the bank's leverage in pumping more money into the economy. On the other hand, Cash Reserve Ratio (CRR) is the portion of deposits that the banks have to maintain with the central bank.The higher the ratio, the lower the amount that banks can use for lending and investment. The other difference is that to meet SLR, banks can use cash, gold or approved securities whereas with CRR it has to be only cash. CRR is maintained in cash form with NRB whereas SLR is maintained in liquid form with the banks themselves. SLR refers to the amount that all banks require to maintain in cash or in the form of gold or approved securities. However, the Monetary Policy has directed the banks to buy government bonds and securities. The objectives of SLR are to restrict the expansion of bank credit, augment the investment of banks in government securities and ensure solvency of banks. CRR is in the form offiat currency stored with the central bank. The reserve ratio is used as a tool in the Monetary Policy, influencing the country's economy, borrowing, and interest rates. It would cause immediate liquidity problems for banks with low excess reserves. It was increased from 5 per cent to 5.5 per cent in last fiscal year's Monetary Policy.

NMB Bank allots Sunrise Bank share

NMB Bank Ltd allotted the shares of Sunrise Bank Ltd today.
Sunrise Bank had received a total of 3,44,526 applications -- including 295 by staff of the bank -- for 10,03,19,959-unit shares. Of the total applications, 4,657 applications were rejected as the applicants had not filled the forms completely. "Applicants, who have not filled in their grandfather's names, account number -- and anything other factor that is mandatory or missed the signature ares -- are disqualified," said the issue manager.
According to the IPOs Regulation, an applicant must fill the bank account number as the money would be returned through banks by account payee cheque. A total of 89,149 public applicants including 295 Sunrise Bank staff got the shares that were floated from May 3-6.
Though some investors blamed the issue manager for mishandling the primary issue, NMB Bank allotted the primary shares on the 64th day -- six days ahead of stipulated allotment time. According to the Securities Board of Nepal (Sebon) regulation, the issue manager can allot Initial Public Offerings (IPOs) within 70 days of the closure of the issue, if applications cross the 3,00,001 mark. Sunrise Bank received 3,44,821 applications worth a little over Rs 10 billion for its 37,50,000-unit shares with a face value of Rs 100 per unit.Aplicants, who asked for 50-unit shares got 10-unit shares while those who asked for 17,010 to 20,000-unit shares were allotted 700-unit shares of the bank.

Vibor Bikas Bank's primary issue oversubscribed by over four times

The primary issue of Vibor Bikas Bank is oversubscribed fourfold to over Rs 1.10 billion. The development bank floated 26,52,000-unit primary shares at a face value of Rs 100 per on June 10.
According to NMB Bank -- sales and issue manager of Vibor Bikas Bank -- the primary issue closed today after the banking hours as the IPO was oversubscribed.
According to the new IPO regulation, the IPO can be closed in four days if it is oversubscribed. Otherwise, it has to be open for a month.
"On the first three days, 32,684 applications worth Rs 558.2 million were received," said Niraj Giri, director at the Securities Board of Nepal (Sebon) -- the regulatory authority of the capital market.
On the last day today, it expects to receive 20,000 applications worth around Rs 500 million, making it a total of over Rs 1 billion -- around four times than what the bank has asked for.
The bank's promoters collectively hold 61 per cent of the total capital of Rs 680 million. However, no individual promoter holds more than three per cent share. The average shareholding is 0.45 per cent and standard deviation 0.46 per cent. The remaining 39 per cent of the shares have been floated among the general public.
Vibor Bikas Bank -- a national level Class B financial institution licensed by Nepal Rastra Bank -- commenced operations from October 4, 2007. It is promoted by 135 professionals with diverse backgrounds.
Meanwhile, Chilime Hydropower that was supposed to float 23,04,000-unit shares from June 15 has been told by the Supreme Court to halt it. Chilime had added a premium of Rs 223.70 to the face value of Rs 100 per unit, making it a total of Rs 323.70 per unit share.
Arun Valley Hydropower is also floating 5,15,000-unit primary shares from June 23. The company has added a premium of Rs 84 to the face value of Rs 100, making it Rs 184 per unit share.
According to the new regulation, a company can add premium equal to its networth, if it is in profit and has distributed cash dividend for three consecutive years. Both Chilime and Arun Valley have distributed cash dividend from their profits for the last three years. Chilime distributed 35 per cent and Arun Valley distributed 20 per cent cash dividend from the profits of last fiscal year.

IPOs and applications
Institutions -- Amount of floated shares -- Applied amount -- Multiplicity -- Applicants
Prime Commercial Bank -- Rs 300 million -- Rs 8950 million -- 29.85 times -- 3,22,973
Sunrise Bank -- Rs 375 million -- Rs 10,000 million -- 26.75 times -- 3,22,703
Citizens Bank International -- Rs 300 million -- Rs 6120 million -- 20.55 times -- 2,75,042
Bank of Asia -- Rs 300 million -- Rs 5670 million -- 18.90 times -- 2,67,834
Apee Finance -- Rs 18 million -- 485.8 million -- 26.98 times -- 38,009
Madhyamanchal Gramin Bank -- Rs 30 million -- Rs 230 million -- 7.8 times -- 20,214
Total -- Rs 1.32 billion -- Rs 31.54 billion -- 23 times -- 12,46,775 applicants
(Source: Securities Board of Nepal)

Prime Bank's IPO oversubscribed, receives over Rs 7 billion worth applications

Prime Commercial Bank's primary issue has been oversubscribed as it has received applications worth over Rs 7 billion for its primary issue that closed today.
"Our collection exceeded our expectations of Rs 4 million and crossed Rs 7 billion," said Narayan Das Manandhar, chief executive officer of Prime Commercial Bank.
"We thought that the collection would be less because the general investors have not yet got their money back from Sunrise Bank's primary issue though the money has returned to the banking channels," Manandhar said adding that the financial institutions also could not lend sufficiently as their closing was nearing.
The bank's Initial Public Offerings (IPOs) closed today after it received more applications than the units of shares it had floated. The bank floated 30,00,000-unit shares worth Rs 300 million on Sunday. According to the new regulation of Securities Board of Nepal (Sebon), the primary issue can be closed after the fourth day if the collection exceeds the target.
On the first day, Sunday, some 28,328 applications worth Rs 704.239 were received and on the second day 35,994 applications worth Rs 1.05 billion rolled in, making it a total of 1.75 billion in the first two days but by the end of third day, the collection shot up to over Rs 4 billion. "On the last day today, we expect the collection to cross Rs 7 billion," Manandhar, the CEO of the 21st commercial bank said. "The bank had 60 counters at Ranjana Cinema hall alone in New Road and has managed the collection well," Manandhar added.
Prime Commercial Bank -- established on September 24, 2007 -- was one of the last commercial banks to float primary issue. Citizen Investment Trust (CIT) was the issue manager for Prime Commercial Bank. Agriculture Development Bank Ltd (ADBL) is the now the last of 26 commercial banks that is planning to float its primary issue. It has appointed Ace Development Bank as its issue manager for the largest ever IPO of Rs 960 million -- more than three commercial banks put together.
Earlier, the primary issue of Sunrise Bank was oversubscribed by around 30 times to over Rs 10 billion. Similarly, the primary issue of Bank of Asia Nepal was oversubscribed by below 19 per cent to Rs 5.40 billion whereas Citizens' Bank International's primary issue was oversubscribed by a little above 20 times to Rs 6 billion.
Due to no other investment opportunity, investment in financial institutions' shares has become a newfound interest of late.
Meanwhile, Sebon has approved the much-awaited Chilime Hydropower Company's primary issue of 23,04,000 units. The board permitted Chilime to add a premium of Rs 223.70 to the face value of Rs 100 per unit, making it a total of Rs 323.70 per unit share equal to its networth.
Vibor Bikas Bank is planning to float 26,52,000 unit shares of its IPO for the public soon.

Nepse surges
KATHMANDU: Pushed by the commercial banks sub-group Nepse surged by 25.17 points or 3.52 per cent on Wednesday to 739.89 points from Tuesday's closing. The commercial banks sub-group flared by 37.14 points or 5.08 per cent to 768.92 points. HydroPower sub-group also posted a whopping rise of 33.62 points or 3.8 per cent rise to 918.66 points. Standard Chartered bank Nepal Ltd's shares saw a Rs 319 rise in its per unti shares whereas Nabil Bank witnessed Rs 310 in its per unit shares.

Sunrise shares hugely oversubscribed by around 30 times

Sunrise Bank's shares might be allotted within 70 days, if the primary calculation of the issue manager NMB Bank is to be believed.
According to NMB's primary calculation, the primary issue of Sunrise Bank has been oversubscribed by around 30 times to Rs 10 billion. The larger the amount and application, the longer it will take to be allotted. However, it would be allotted within 70 days at the latest.
Pravin Raman Parajuli, Head-Merchant Banking Department of NMB Bank Ltd -- the issue manager of the Sunrise Bank -- estimated that the total amount could be around Rs 10 billion and applications over 3,38185.
The actual amount collected on the fourth and last day yesterday will take a couple of days to be totalled. "Cheques for large amount take at least two days to get cleared from the central bank," he said adding that the current of roughly around Rs 8 billion -- as of today's calculation -- could increase to around Rs 10 billion.
The recently amended Securities Issuance and Registration Regulations has decreased the number of days of application to four. However, the allotment period has been increased. Shares will be allotted within 45 days at the earliest or 70 days at the latest depending on the number of applicants.
The primary issue of 37,50,000-unit shares worth Rs 375 million -- the largest among commercial banks -- at Rs 100 per unit par value each was floated from Sunday.
The amount and the number of applications on the first three days have been confirmed but the last day's amount is just an estimate, Parajuli added.
Earlier, the primary issue of Bank of Asia Nepal was oversubscribed by below 19 per cent to Rs 5.40 billion, whereas Citizens' Bank International's primary issue was oversubscribed by a little above 20 times to Rs 6 billion.
Due to no other investment opportunity, the investment in financial institutions' shares has become a newfound opportunity lately.

No online lure
KATHMANDU: For the first time, issue manager NMB Bank started online application system. "The online application attracted around 4,000 would-be-investors, but only 2,000 of those who filled online profile applied for the primary issue of Sunrise Bank," said Upendra Poudel, CEO of NMB Bank. The total applications received were over 3,38,185, according to a primary estimate. The lukewarm response to the online application system could be due to low IT awareness and prolonged power cuts. Online profile filing is a regular system that is not closed after one primary issue. "Once filled and submitted online and having got an ID code, for investors it will be useful for any primary issue that has NMB Bank as its issue manager in future too," Poudel added.

The oversubscription
Day -- Applications -- Worth Rs
Sunday -- 19,185 -- Rs 811.35 million
Monday -- 65,000 -- Rs 1.70 billion
Tuesday -- 86,000 -- Rs 2.25 billion
Wednesday -- 1,68,000 -- more than Rs 3.91 billion *
Total -- 3,38,185 -- more than Rs 7.92 billion*
(*The amount and application to go up)

Sunrise Bank nears collection target

On the first two days -- Sunday and Monday -- in the invite for primary share applications for Sunrise Bank, a total of 84,185 applications worth over Rs 2.51 billion were collected.

"On Sunday, a total of 19,185 applicantions worth Rs 811.35 million were received and on Monday a total of 65,000 applications worth Rs 1.70 billion were received making it a total of 84,185 applications worth over Rs 2.51 billion," said Niraj Giri, director of the Securities Board of Nepal (Sebon) -- the regulatory authority of the capital market.

The protests and uncertain political situation in the first two days of the week are thought to have made people hesitant whereas today the would-be-investors' queues could be more visible around town.

The primary issue of 37,50,000-unit shares worth Rs 375 million -- the largest among commercial banks -- at Rs 100 per unit par value each has been floated from Sunday. Sunrise Bank expects a total of over Rs 6 billion -- over 20 times -- worth applications. If such an encouraging situation persists over the next two days -- today and tomorrow -- the bank's expectations might be easily met.

The capital market is considered a mirror of the economy. However, the Nepali capital market has not yet been able to reflect the economy as Nepse today posted a rise of 7.68 points (1.2 per cent) to 648.57 points just a day after the government led by Prime Minister Pushpa Kamal Dahal 'Prachanda' resigned yesterday.

"The Nepali capital market is still not mature, it is influenced by a handful of people," said Dr Chiranjivi Nepal, former chairman of Sebon. "It's not an isolated case, the market in the past too never reflected the prevailing economic or political uncertainty," he added.

Another trait of the Nepali capital market is that it is dominated by financial institutions. The share of the financial institutions in the total share trading in the sole secondary market stands at over 95 per cent in 2065 BS -- mid-April 2008 to mid-April 2009. The commercial banks' sub-group has 45.37 per cent, finance companies' sub-group has 26.77 per cent and development banks' sub-group has 23 per cent share, making it to a total of 95.14 per cent between mid-April 2008 to mid-April 2009.

The remaining six sub-groups -- trading (2.05 per cent), hydropower (1.47 per cent), insurance (0.89 per cent), others (0.35 per cent) and manufacturing and processing (0.1 per cent) -- have less than five per cent share in the total trading.In power-starved Nepal, the hydropower companies' performance also cannot not be called satisfactory. "For sustainable development of the Nepali capital market, the presence of more manufacturing sectors apart from more brokers and Central Depository System (CDS) is a must," added Dr Nepal

Sunrise primary share lures investors

The collection centres of Sunrise Bank's primary issue were busy today collecting primary share applications for the bank that has floated 37,50,000-unit shares worth Rs 375 million -- the largest among commercial banks -- at Rs 100 per unit par value each.
According to present directives of Nepal Rastra Bank (NRB), a commercial bank has to float 30 per cent primary shares of the paid up capital among the public which comes to 30,00,000-unit shares. "Sunrise Bank has floated 37,50,000-unit shares worth Rs 375 million, the largest ever Initial Public Offering (IPO) by a commercial bank," said Kishore Maharjan, CEO of the bank. After the primary issue, the paid up capital of the bank will touch Rs 1.25 billion.
Maharjan, the CEO of the 23rd commercial bank, also expected that the IPO would be oversubscribed by above 20 times to from over Rs 6 billion to Rs 7 billion. The issue will be open till Wednesday as the Securities Board of Nepal (Sebon) in its new regulation has reduced the IPO application duration to four working days.
In the earlier primary issues, investors complained of fake applications forcing Sebon -- the regulator of the capital market -- to inspect collection centres. "We inspected various counters around the Valley today," informed Niraj Giri, director of the board. There are over 70 collection centres throughout the country for the issue.
After Sunrise Bank, Prime Comercial Bank and Agriculture Development Bank Ltd (ADBL) are also planning to flaot their primary shares. Prime has appointed Citizen Investment Trust (CIT) and ADBL has appointed Ace Development Bank as issue manager. ADBL will float the largest IPO of Rs 960 million -- more than three commercial banks put together -- soon to the public.


Online profile filing
KATHMANDU: Investors can fill their forms online as well for Sunrise Bank's primary issue. NMB Bank Ltd -- the issue manager of Sunrise Bank -- has launched online share application service -- NMB e-Solutions: NMB online share application. An investor can fill the application form online and save time. After filing profile online, the investor gets ID code slip which can be registered at privileged counters of all branches of NMB Bank and Sunrise Bank including six other financial institutions throughout the country. After one gets ID code, one has to manually register at the privileged counters with mandatory documents like photos and photocopy of citizenship certificate and the amount equal to the number of shares sought. Aside from the financial institutions, the bank has opened six other counters at Dashrath Stadium for share applicants.


Nepse dips
KATHMANDU: Nepal Stock Exchange (Nepse) dropped by 5.74 points to close at 642.04 points from Sunday morning's opening of from 647.78 points. All the major markey players -- commercial banks, development banks and finance companies sub groups -- lost as only insurance sub group gaimed. For the first time, the capital market seems to have reacted from the day's political developments. Earlier the market never used to be bothered with political situation. Out of the 56 companies traded -- 16 gained and 33 lost. A total of 2,18,590-unit shares changed hands through 886 transactions. Though the Nepse opped, on Sunday -- the first day of the trading for this week -- the secondary market witnessed Rs 1,03,967,604 turnover.

Liquidity cruch fuels bank interest rates

Liquidity crunch has started fuelling the banks interest rates that were till last year hovering around and below five per cent.
"A huge amount of money is going to be invested in mega projects like Upper Tamakoshi soon and the banking sector will feel the heat," said Kishore Maharjan, chief executive officer (CEO) of Sunrise Bank -- the 23rd commercial bank.
Maharjan also forecast liquidity crunch in six to eight months. "We believe that in six to eight months, there will be a massive liquidity crunch in the market," he said adding that Sunrise Bank has, targetting the coming critical period, launched a fixed deposit product Sunrise Nava Barsha 2066 Muddati Patra that gives nine per cent interest per annum.
Though the established commercial banks are in comfortable position, new banks may have to face a critical situation if they do not plan ahead. "The days of following institutional depositors in a cut-throat competition offering them highest rate at the cost of individual customers are gone," Maharjan added. The institutional depositors like Citizen Investment Trust, Beema Sansthan, Employees Profident Fund are investing their money in Upper Tamakoshi forcing the commercial banks to go to general public.
Thus Sunrise is targetting individual depositors who are getting low interest rates on their hard-earned money, according to Maharjan who said that Sunrise will float 3.75 million-unit primary shares worth Rs 375 million.
Targetting the share investors, the bank has also brought another new savings product called Share Lagaani Khata offering 6.75 per cent interest per annum.
The recent heavy withdrawal from commercial banks due to the government's fears has also compelled banks to increase the interest rates.

Rates looks up

The days of low interest rates are soon going to be things of past as some of the banks have started increasing their interest rates.
Though the interest rates offered by some of the leading banks is as low as two per cent, cut-throat competition between the banks has forced them to hike interest rates.
"The older banks continue to give low interest rates between two and three per cent," Kishore Maharjan, CEO of Sunrise Bank Ltd said, adding that the new banks are giving better rates.
"Sunrise Bank offers the highest rate on the savings deposit at 6.5 per cent that exceeds the inflation rate of six per cent," he adds.
The latest entrants in the banking sector like Global Bank, Citizen International Bank and Prime Bank come next in terms of offering comparatively high interest rates at present.
"Banks increase interest rates on lending to compensate for increased interest rates on deposits. Interest rates on deposits jumped substantially due to liquidity crunch, result of capital flight and absorption of fund by the government," Maharjan said.
Small accountholders will largely benefit, if increasing of interest rates will be a successful mantra for Nepali banks in the days ahead.
Since there are few deposit strong corporate institutions, they had field day hiking up their interest rate as high as 8.5 per cent for one year fixed deposit.
Spread is also higher in Nepal because of low deposit rates. "The lending rates of Nepali banks are much lower in comparison to India or Pakistan," he added.
"Because of several repos and selling of over $24 million has solved the liquidity crunch temporarily," Maharjan said, adding that when government absorbs both ADBN and NT’s share money next month, there could be some crunch again.
The share money of NT’s share is in the banking system unlike the ADBN’s share money that is blocked at a place.
Customers can open an account at very low balance or even at zero balance also, at present. A customer can open an account at Sunrise with Rs 1,000. Sunrise Bank is also providing accident and disability insurance services for free.

Banks flood Nepal

It seems banks are flooding Nepal.
Two commercial banks; Bank of Asia and Sunrise Bank, started their operations from October 12 making the total number of commercial banks in operation at 23.
Similarly, two more development banks; Country Development Bank (CDB) based in Banepa and Kasthamandap Development Bank (KDB) based in Kathmandu, also started their operations from today.
Bharatmani Sharma Risal is the founding chairman and Uday Lal Raj is the managing director (MD) of the CDB and Samundra Kaji Shrestha, Bishnu Sundar Rimal and Mohan Bahadur Thapa are the Board of Directors.
The authorised capital of Country Development Bank is Rs 200 million, while Rs 100 million is issued capital and Rs 51 million is paid-up capital. The bank aims to float shares to the general public of Rs 49 million."
Due to Nepal Rastra Bank’s (NRB) directive, those financial institutions that have already registered must get operating licence within the month of Ashwin or they will betreated like the new ones," Bhishma Raj Chalise, chief operating officer (COO) of KDB says explaining the reason of the sudden flood of banks.
Jagannath Gyawali is the chairman and Krishna Gyawali is the director of KDB, where there are 23 promoters. On one hand, data from NRB shows that only 20 per cent of the populace have access to banking services leaving the vast majority out of the banking reach. And on the other hand, all the banks though they claim of going to rural areas are urban-centric and promise to provide modern banking services.
"There has been no market expansion and the banks are operating on very thin-margin," says one banker adding that the size of the market should rise and the banks explore new areas of investment.As the market is not growing in proportion to the number of players in this field, banking yield has also gone down.
The cut-throat competition has also given rise to unhealthy practise like ‘stealing’ the customers and staff.Both the new commercial banks have Rs 2 billion authorised capital and Rs 1 billion issued capital — 70 per cent promoters and 30 per cent public.
T M Duggar group is one of the promoters of Sunrise Bank, while Shangai group and Bishal group are the major promoters of Bank of Asia.
NRB has lately awarded licence to operate commercial banks and development banks after increasing their authorised capital, for commercial banks Rs 2 billion and fordevelopment banks Rs 640 million. But with the increasing number of financial institutions, NRB has to increase its supervisory capacity also, which is going to be a major challenge.
The more number of commercial banks means the more difficult it will be for the NRB to supervise promptly.
"The other factor that no one has questioned till date is why all the business houses want to own bank. Banks should be operated by the professionals. Each of the business houses in Nepal owns a bank," says one banking professional adding that Nepal Bangladesh Bank should be an eye-opener for the public, supervisory authority and ‘yes of course’ to the court.
"The trend cannot be said healthy," he adds.

NDB refutes
KATHMANDU: Nepal Development Bank (NDB) has refuted the allegations NRB has made against it by organising a press meet on Friday. "We are not a troubled-bank like the NRB has alleged us," says Prabhukeshar Man Pradhan, chief executive officer of the bank adding that it has been following the NRB’s directives. NRB, the regulatory authority, has directed NDB to follow its directives as NDB has been found troubled. NRB has earlier also intervined in the Nepal Bangladesh bank to protect depositors' savings. NRB must be strict on the issue of depositors otherwise, noone will tomorrow deposite in any bank. NRB must intervine in the troubled banks.