Global Bank special meeting okays merger with IME, Lord Buddha
KATHMANDU, May 11: A special general meeting of Global Bank held on Friday has given green signal to the institution´s merger plan with IME Financial Institution and Lord Buddha Finance.
Once the deal goes through, Global Bank will be the first category ´A´ financial institution to lead the merger of three institutions. All three institutions have received the approval of the central bank to go ahead with the merger.
“We hope to conclude the entire process before mid-July,” Chandra Dhakal, chairman of Global Bank, told Republica, adding that the three institutions will come up with a single balance sheet at the end of the fiscal year.
Once the three institutions are combined, the new entity will be called Global IME Bank and it will have a paid-up capital of around Rs 2.23 billion. Currently, Global Bank has a paid-up capital of Rs 1.6 billion. IME has Rs 431.84 million in capital and Lord Buddha´s paid-up capital stands at Rs 168.28 million.
As per the agreement, the existing board of directors of Global Bank, with Dhakal at helm, will lead the new bank. “The composition might change after we hold our annual general meeting in the next fiscal year,” Dhakal said. He also informed that the current CEO of Global Bank, Ratna Raj Bajracharya, will also get to retain his position to lead the management team of the new bank.
However, the composition of promoter and public shares is yet to be decided. Currently, promoters and public shareholders have 70:30 stake in Global Bank. The composition is same at Lord Buddha, whereas in IME promoters own 65 percent stake in the company and public shareholders have 35 percent stake.
Earlier, Global Bank had decided to go for merger with IME, for which it had obtained a letter of intent from the central bank. On the other hand, Lord Buddha had plans of uniting with Pashupati Development Bank.
“But after Lord Buddha had differences with Pashupati, it decided to join Global and IME on the merger plan,” an official of Nepal Rastra Bank said on condition of anonymity. “Besides, two of the promoters of Lord Buddha were directors at Global Bank, which made the unity process lot easier.”
Currently, merger fever has gripped the financial sector as 70 percent of banks and financial institutions have announced such plans to consolidate their position in the market, according to the central bank.