Monday, July 15, 2013

Global IME starts operation after merger

Financial institutions should not jump into mergers without testing their compatibility and without knowing about the transactions of each other‚ according to the central bank governor.

“Financial institutions need to check each other’s strengths and weaknesses‚ and be aware about the lending portfolio and clients before deciding to become one entity‚” suggested Nepal Rastra Bank (NRB) governor Dr Yubaraj Khatiwada‚ during the inauguration of the newly merged Global IME Bank with Social Development Bank and Gulmi Bikas Bank‚ here‚ today‚

“Merging financial institutions undertake Due Diligence Audit but they should consider conducting staff audit as well‚” he said. The governor further added that mergers could be a rescue option for promoters who have dived into opening financial institutions but have had a difficult time sustaining them. Governor Khatiwada also warned that mergers should not create ‘too-big-to-fail banks’ and ones that are difficult to manage in size.

Global IME Bank’s merger with the two development banks was finalised in May‚ while NRB and the Office of Company Registrar gave the final nod a week ago.

Global IME Bank was formed last year following the merger between commercial bank — Global Bank — and two finance companies — IME Financial Institution and Lord Buddha Finance.

The Due Diligence Audit has fixed Gulmi Bikas Bank and Social Development Bank’s share swap ratio at Rs 50 and Rs 40 for each Global IME share at Rs 100.

Following the merger‚ the bank’s capital fund stands at Rs 3.45 billion and will be serving through 64 branches across Nepal. Its deposit has increased to Rs 32 billion and lending has gone up to Rs 26 billion. “Though Global Bank was established as the 19th commercial bank of the country‚ following the merger‚ now we are among the top 10 large banks in terms of capital and have the widest branch network among private banks‚” said chairman of the bank Chandra Dhakal.

“Mergers help increase capital and makes the institution strong but at the same time it should also provide more returns to shareholders‚ then only should the merger be encouraged‚” said president of Nepal Bankers’ Association Rajan Singh Bhandari.
src THT

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