ADBL shares oversubscribed

The primary issue of Agricultural Development Bank Ltd (ADBL) has already been oversubscribed by over one-and-a-half times.

"Till today afternoon, we received 55,000 applications worth Rs 1.40 billion," said Siddhanta Raj Pandey, chief executive officer of Ace Development Bank -- the issue manager of the largest public issue in the history of Nepal's capital market.

ADBL has floated 9.6 million units of shares -- worth Rs 960 million -- at a face value of Rs 100 per unit from Sunday. "Due to oversubscription, it will be closed by Wednesday evening," said Shyam Singh Pandey, chief executive officer of ADBL that has floated the primary issue in a volume equal to that of three commercial banks combined.

The overwhelming collection of the money could ease liquidity crunch a little, if it has come out of the banking channel as it is suspected that urban cooperatives and people have huge cash that they invest on shares or on reality sector.

"Urban cooperatives are involved in lending for shares at high interest rates, putting the norms of cooperatives at stake," said an investor, who himself has borrowed Rs 200,000 from a cooperative at high interest rates to apply for the ADBL shares.

Normally, commercial banks have been issuing primary shares worth Rs 300 million as directed by Nepal Rastra Bank (NRB). The rule is that a commercial bank has to issue 30 per cent primary shares of the total paid-up capital.

ADBL -- a development bank turned 18th commercial bank -- will have Rs 3.20 billion paid-up capital after this issue.

"Despite poor performance of the secondary market at present and liquidity crunch, there is enormous demand in the market," Pandey said adding that there has been encouraging participation in the districts but that the collection was more in the valley.

ADBL's strength is its network, which is the largest one among banks. However, it has to introduce new technology and operate efficiently if it wants to compete with them as the other banks are more efficient and tech-savvy.

On the other hand, being a government bank, political intereference and frequent change of CEOs would also have negative impact on ADBL's financial health in the long run.

Janata Bank starts operation

Janata Bank Nepal Ltd started its operation from today as the 27th commercial bank in the country. Nepal Rastra Bank (NRB) had given it an operating licence last week.

"We got the operating licence last week and today we started our operation informally," said Bijay Pant, CEO of the youngest Class-A bank in the country. "We are yet to formally start our operation."

"With a paid up capital of Rs 1.40 billion and 835 promoters, we have the largest paid-up capital and number of promoters," he said.

Guru Prasad Neupane is the chairman of the Bank with journalists, academicians and professionals as promoters.

Despite the overcrowding of banks, there are more commercial banks in the pipeline, some of them already got the Letter of Intent (LoI) from the central bank. Megha Bank Ltd, Century Commercial Bank and Civil Bank are the banks in pipeline.

On one hand, only two-third of the population have access to banking system, and on the other, the number of banks are mushrooming in urban areas fuelling unhealthy competition.

The already operating Class-B and C financial institutions are also planning to upgrade. Not long ago, Kist and NMB underwent an upgradation to become commercial banks.

Development Credit Bank Ltd -- the 24th commercial bank-- was upgraded from Class-B development bank. Nepal Merchant Banking and Finance Company is the 25th commercial bank to be upgraded as NMB Bank from class-C category.

Similarly, Kist Bank became the 26th commercial bank after it upgraded itself from Class-C financial institution.

According to the central bank's six months' data, a total number of companies listed at the Nepse increased to 165 in mid January 2010 compared with 149 last year.

Among them, 133 are banks and financial institutions (including insurance companies).

List of Commercial Banks

1. Nepal Bank Ltd

2. Rastriya Banijya Bank

3. Nabil Bank Ltd

4. Nepal Investment Bank Ltd

5. Standard Chartered Bank Nepal Ltd

6. Himalayan Bank Ltd

7. Nepal SBI Bank Ltd

8. Nepal Bangladesh Bank Ltd

9. Everest Bank Ltd

10. Bank of Kathmandu Ltd

11. NCC Bank Ltd

12. Lumbini Bank Ltd

13. NIC Bank Ltd

14. Machhapuchhre Bank Ltd

15. Kumari Bank Ltd

16. Laxmi Bank Ltd

17. Siddhartha Bank Ltd

18. Agriculture Development Bank Ltd

19. Global Bank Ltd

20. Citizens Bank International Ltd

21. Prime Commercial Bank Ltd

22. Bank of Asia Nepal Ltd

23. Sunrise Bank Ltd

24. Development Credit Bank Ltd

25. NMB Bank Ltd

26. Kist Bank Ltd

27. Janata Bank Nepal Ltd

Japan gives $4.55m aid to Nepal

Japan has pledged a grant aid totaling US$ 4.55 million to protect women, children and the poor in Nepal under the Japan Fund for Poverty Reduction (JFPR) that supports high-impact projects to reduce poverty in developing countries in Asia and the Pacific.

The fund supports activities in Nepal that include provision of small-scale basic economic and social services to the poor.

Masakazu Sakaguchi, executive director of the Asian Development Bank (ADB), -- while launching the programme here today -- said that in line with the poverty reduction goals of JFPR, all three projects are targeted at benefiting and empowering the most vulnerable and often excluded groups in Nepali society- women, children and the extreme poor.

JFPR projects also build capacities, and promote partnerships among various stakeholders for tangible and sustainable results through innovative approaches, he added.

ADB's country director for Nepal, Barry J Hitchcock, said that the women and children service centers will support the Nepal police in establishing effective measures for protecting women and children who are victims of abuse, whilst the legal documentation effort will enable people in some of the poorest districts to gain access to essential services.

The fortified flour in Chakki mills will help reduce anemia and other illnesses linked to vitamin and mineral deficiencies in children, he added.

Rameshore Khanal, secretary at the Ministry of Finance said that this fund will help the rural Nepali women, children and poor by raising awareness among them and also help them generate income.

The government of Nepal is helping by setting up women and children service centers for victims of abuse, facilitating legal identity documentation for poor people and production of fortified flour in Chakki mills, the press release issued on the occasion stated.

Second edition of economic indicator

Securities Research Center and Services Pvt Ltd (SRCS) has published the second edition of 'Financial Indicator' that includes financial data of companies listed and unlisted at the Nepal Stock Exchange (Nepse).

The book has the financial statistics of twenty-five companies belonging to different sectors like commercial banks, development banks, finance companies, insurance companies and hydro power and so on.

The publisher believes that the book will facilitate share investors, students, researchers, market analysts, journalists and the regulatory board. Investors can analyze these statistics and select safe companies to invest in. "This is the only book published in Nepal that includes such financial information," said Rabindra Bhattarai, a renowned share market analyst, who has edited the book.

SRCS has already published ten books on Nepal's capital market, derivatives and banking.

ADBL floates largest ever primary issue

Agricultural Development Bank Ltd (ADBL) is floating 9.6 million units of shares -- worth Rs 960 million -- at a face value of Rs 100 per unit from Sunday. This is the largest primary issue in the history of the banking history in Nepal. Ace Development Bank has been appointed issue manager of ADBL that has its strength in its network, which is the largest one among the Nepali banks. If it introdues new technology and operate efficiently, ADBL can lead the market. Else, being a government bank, political intereference and frequent change of CEOs would have negative impact on its financial health.

Investors should be aware of the fact that the bank, being a government undertaking, took long to distribute rights shares' certificates. The bank distributed the rights shares' certificates after great hue and cry. "It might do the same in the case of distribution of share certificates and not list these shares at the secondary market on time, keeping investors ion tenterhooks," said Rabindra Bhattarai, stock market analyst. "The success of the largest issue also depends on how investors react as the bank has Rs 450 million negative reserve and the secondary market is performing badly since the last couple of months." The secondary market also could not perform well due to the liquidity cruch in recent months.

"Since it is the largest issue and the market is witnessing poor performance, investors might not get value also," Bhattarai added.

If the shares are oversubscribed, the issuance will close on Wednesday -- the fourth day -- according to rule.

Meanwhile, the NMB Bank Ltd's 7,15,000-unit of further public issue has closed from Friday, according to DCBL Bank Ltd, the issue manager of the first further public issue in the Nepali capital market. NMB Bank Ltd has floated further public issue for the public at Rs 285 per unit -- adding Rs 185 premium to the face value of Rs 100.

IFC trains bankers

The South Asia Enterprise Development Facility, managed by IFC, in partnership with United Kingdom's Department for International Development, Norwegian Agency for Development and Nepal Bankers' Association, organised a three-day training programme on 'Hydropower and Renewable Energy Financing' for bankers.

IFC -- a member of the World Bank Group -- is working with the Nepal Bankers' Association (NBA) to bring about awareness on financial risks and opportunities associated with hydropower and renewable energy projects. Given Nepal's current energy crisis, hydropower holds great potentials for the country as a clean alternative source of energy.

The bankers lack the experience of financing small hydropower projects. Such investments usually involve high risk with long repayment periods and complex technical aspects, said the IFC. The training programme helped bankers understand these projects better by exploring topics ranging from market potential in Nepal, credit assessment, financing structures, laws, licenses and policies, risk and mitigation, insurance to legal issues related to hydropower. Other renewable energy financing options were discussed and participants visited a hydropower plant to gain real on-site understanding of these projects.

"Nepal is strategically located to tap this resource, so this programme represents a great investment opportunity for bankers and businesses alike," said NBA president Sashin Joshi.

Ian Crosby, Head of SEDF, said, "This training was a critical step toward creating opportunities for financial institutions to build a sustainable energy finance portfolio that will address climate change issues, improve energy security and reduce pollution in Nepal, while increasing bank profits."

SEDF is working with financial institutions to develop strategies, products, services and marketing plans in order to enhance their sustainable energy finance portfolios. SEDF also is developing the capacity of energy auditors and providing the latest market information to assist banks in financing energy-efficient projects.

IFC is the only international financial institution focused exclusively on private sector, the engine of sustainable development in emerging markets. Along with IBRD, it is currently seeking to increase capital to strengthen its ability to create opportunity for the poor in developing countries. It plans to increase financing for renewable energy and other energy efficient projects.

Capital market to have institutional investors

The Nepali capital market might see institutional investors soon.
Citizens' Investment Trust (CIT), Employees' Provident Fund (EPF) and Rastriya Beema Sansthan (Insurance Board) have agreed -- in principal -- to invest in the market.
During a discussion held here today between these institutions and Securities Board of Nepal (Sebon) and Nepal Stock Exchange Ltd, they agreed to invest in the capital market. Sebon has shown confidence that the entry of the institutional investor in the market will boost the confidence of general investors as it will help balance the market.
Currently, there are around 1.4 million investors involved in the market and there is no institutional investor. "If institutional institutions get involved in the capital market, the supply and demand mechanism will be balanced and the market can be developed," said the board.