November 15: Global IME Bank has signed a merger agreement with Bank of Kathmandu in what is believed to be a deal to create the biggest bank of Nepal in terms of capital and business.
The two banks signed an agreement to this effect on Monday.
According to a statement issued by Global IME Bank, its chairman Chandra Prasad Dhakal and the chairman of BoK Prakash Shrestha signed the agreement on behalf of their respective banks.
After the merger, the total capital of the merged entity will rise to Rs 57 billion while the paid-up capital will increase to Rs 35.77 billion. The total deposits of the merged entity will cross Rs 400 billion while the credit flow will stand at Rs 379 billion, making it the biggest bank of Nepal in terms of paid-up capital and volume of business.
Board of directors of both the banks have approved a swap ratio of 1:1 based upon the recommendation of an evaluation report.
As per the recommendation, the name of the new entity will be Global IME BoK Limited and the new board of directors will be represented by five members of Global IME Bank including its chairman. Likewise, the new board of directors will have two members from BoK.
Global IME Bank’s CEO Ratna Raj Bajracharya will continue his job as the CEO after the merger.
Both the banks have earned net profit of Rs 1.47 billion by mid-October in the current fiscal year. After the merger, the new entity will have a total of 396 branches, 368 ATMs, 275 branchless banking facilities and 61 extension counters and three contact offices abroad. The new bank will have more than 4 million customers.
The two banks believe that the merger will help deliver better services to the customers.
Currently there are 26 commercial banks operating in Nepal.
Banks and financial institutions in Nepal have started merging with each other or acquiring other banks as per the directive of Nepal Rastra Bank. The central bank of Nepal has adopted a policy to encourage merger/acquisition of banks so that the banks can cope with financial crisis better in the future.
