Kist Bank and Vibor Development Bank sign MoU for merger
KATHMANDU: Kist Bank, a A class commercial Bank, and Vibor Bikas Bank, a B class development Bank, have agreed to merge, in a move that will support Jyoti Group’s bid to acquire the largest stake in Kist. Kist Managing Director Kamal Gyawali and Vibor Director Roop Jyoti signed a memorandum of understanding (MoU) for the merger on Thursday.
Although Jyoti group has been in the financial sector for the last one and half decades through Bhajuratna Finance, which was merged with Vibor last year, the group’s entry into Kist will ensure its prominent presence in the sector.
The Jyotis are preparing to acquire a 12 percent stake in Kist from Guna Group, which holds 26 percent shares in the bank. Guna’s chief Rajendra Shakya is facing troubles in his real estate ventures. Kist and Vibor have to complete the merger within six months after the MoU signing, as per the merger guidelines issued by the Nepal Rastra Bank.
The name of the merged entity will remain Kist Bank. As both the banks are currently incurring losses particularly due to their huge exposure to the realty sector, Gyawali said Kist will turn into profit at the end of the fiscal year after the current provisioning will turn into profit following a write back. He said entry of a reputed business group like the Jyotis as the biggest shareholder would guide the bank to the direction of success.
As of the second quarter of this fiscal year, Kist has a paid-up capital of Rs 2 billion and deposit mobilization of Rs 20.98 billion. The bank has extended Rs 17.59 billion loans and its capital adequacy ratio stands at 10.80. Kist incurred a loss of Rs 69.57 million in the second quarter. On the other hand, Vibor has a paid-up capital of Rs 916.2 million, deposits worth Rs 2.86 billion. It has extended credit worth Rs 1.68 billion and its capital adequacy ratio is 13.75 percent. NRB has been encouraging banks and financial institutions to go for merger as the number of financial institutions are more than the size of national economy.
Published Date: Friday, March 22nd, 2013 | 12:08 AM