January 11: Nepal Investment Bank Limited (NIBL) and Mega Bank Limited have launched integrated transactions from Wednesday following a merger. The two banks merged to form ‘Nepal Investment Mega Bank (NIMB) Limited’ and announced the commencement of joint operations amidst a programme on January 11.    

Prior to the merger, NIBL had a paid-up capital of Rs 18.31 billion while that of Mega Bank was Rs 16.2 billion. Following the merger, the total paid-up capital of the banks has reached over Rs 34 billion while the total assets is worth Rs 471 billion and the total capital is calculated at Rs 580 billion.

Likewise, the total deposits of the new entity is Rs 360 billion and the credit portfolio is Rs 329 billion. The merged entity has 296 branches, 59 extension counters, 279 ATM booths and over three million customers.

The banks merged at swap ratio of 100: 90. It means that one unit of share of the NIBL will be equivalent to 0.90 unit of Mega Bank.

Chairman of Nepal Investment Bank Limited, Prithvi Bahadur Pande, is now the chairman of NIMB and Jyoti Prakash Pandey is the CEO. The new Board of Directors has the representations of both banks. Prajanya Rajbhandari and Kabi Kumar Tibrewala represent the NIBL while Gopal Khanal, Madan Kumar Acharya and Mukti Ram Pandey represent Mega Bank.   

The two banks merged in line with the ‘big merger’ policy of Nepal Rastra Bank (NRB).

The central bank has adopted a policy of reducing the number of banks and financial institutions to strengthen the banking system. The study report titled 'Optimum Number of Banks and Financial Intuition in Nepal' published by NRB in April 2022 showed that 11 to 15 commercial banks are suitable for Nepal.

There are three main objectives behind NRB’s policy of merging banks and financial institutions, said the spokesperson of NRB, Dr Gunakar Bhatta. First, by increasing the capital, the organization will be strengthened, secondly, the operating expenses will be reduced and thirdly, unhealthy competition will be reduced.

“By increasing the bank's paid-up capital and making it a strong institution, they can invest in big projects, instead of having separate board of directors or management in many banks. When there is a single bank, the number of such banks will decrease and the operating expenses will be reduced, the unhealthy competition will be reduced and the quality of the financial situation will improve,” Bhatta told New Business Age in a recent interview.