First Business News Portal in English from Nepal
KATHMANDU: The annual general meeting of Himalayan Bank has rejected the special proposal of merger with the Nepal Investment Bank Ltd (NIBL) . The bank’s 29th annual general meeting held today rejected the proposal following dispute among the shareholders over the merger.
Himalayan Bank had decided to pass the merger proposal through voting following differences over the merger between its shareholders. Accordingly, voting was held today. In order to pass the merger proposal, 75 percent shareholders had to approve it.
However, sources said that 42 percent of the votes came in against the merger proposal following objections expressed by the Employees’ Provident Fund, N Trading Company and Chhaya International.
Himalayan Bank has 14.87 percent share investment of the provident fund. Similarly, N Trading Company has 12.77 per cent stake and Chhaya International has 8.94 per cent stake. Thus, the merger proposal could not be passed by the annual general meeting of Himalayan Bank following objection over the agreement proposal with NIBL from 36.58 percent shareholders.
Habib Bank of Pakistan has a 20 percent stake in Himalayan Bank. It is the largest shareholder in the bank. The second largest shareholder is the Employees Provident Fund.
The board of directors of Himalayan Bank had been divided since the merger agreement was signed with the NIBL. Founding investors: Habib Bank, Mutual Trading Company, Aabha International and Khetan Group were in favor of the merger while EPF, N Trading Company and Chaaya International were against the merger.
Ashoke Rana, chief executive officer of Himalayan Bank informed Fiscal Nepal that the merger process with NIBL could not be completed after shareholders stood against it. “42 percent of shareholders stood against the merger. Legally, we need 75 percent of stakeholders to favor the merger proposal,”said Rana.
HBL and NIBL had inked merger agreement on May 13. Following the agreement, both the institutions had formally informed the Nepal Rastra Bank (NRB), Nepal Stock Exchange (Nepse), Office of the Company Registrar and Securities Board of Nepal (Sebon) about the merger agreement. Moreover, shares of both the institutions had been been suspended until the integrated transaction is completed. The two institutions had planned to start joint operation from October 1 last year.
Merger between NIBL and HBL was expected to me a mega-merger between two financial institutions in the history of Nepal’s banking and financial industry. However, the process has come into a complete halt for now.
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