Merger and acquisition of BFIs in Nepal

Merger and Acquisitions
in BFI’s in Nepal
Group B
Monika Maheshwari(12319)
Ujjwal Chand(12310)
Dichhya Amatya (12302)
Bishal Tamrakar(12333)

Background
 M & A is one form of survival strategy
 1+1=3
 Difficult, challenging, and chaotic
 Nepal: increase in the number of banks and
financial institutions
 Hence requirement of mergers

Types
Merger
Horizontal Vertical Conglomerate
Product Extension
Mergers
Geographic
Market Extension
Pure
Conglomerates
Mergers

Definitions
 Merger: The combining of two or more
companies, generally by offering the stockholders of
one company securities in the acquiring company in
exchange for the surrender of their stock
 Acquisition: When one company acquires another
company, may be either friendly acquisition or
unfriendly acquisition

 To maximize Shareholder’ wealth
 To achieve acquisition of the most effective
technology
 To increase market share
 To Gain Cost Efficiency
Reason for Merger and Acquisition

Benefits of Merger and Acquisition
 Synergistic Effect
 Greater Value Generation
 Cost and Revenue Benefits
 Accessing Technology and Skills
 Market dominance and growth opportunities

 Financial Stability
 Survival and sustainability
 Increase in paid up capital
 Survive the Competition
 Strengthen the banking sector
In Nepalese Context

Merger
 Article 68 of BAFIA (2063), “A licensed institution
may, by fulfilling the procedures refer to in this Act,
be merged with another licensed institution in
accordance with the laws in force.”
 Acquisition not defined in Nepalese law”

 Chapter 1: Preliminary
 Section 1: Title and Commencement
 Section 2: Definition
 Chapter 2: Objectives, Capabilities and
Commencement Application
 Section 3: Objectives
 Section 4: Capability
 Section 5: Application for Commencement
 Section 6: Agreement on Principle
Process of Merger of BFI’s in Nepal

 Chapter 3: Assets and Liabilities, Cooperation
and Final Consent
 Section 7: Valuation of Assets and Liabilities
 Section 8: Mutual Agreement
 Section 9: Final Approval in Merger
 Section 10: Subsequent to the Approval
Cont…

 Chapter 4: Concessions
 Section 11: Concession Received when merged
 Chapter 5: Miscellaneous
 Section 12: Directives to Merge
 Section 13: Others
Cont…

NepalSriLankaMerchantBankandNBBank–2067BS
NRBintroducesMergerBylawsin2068BS
HimchuliBikasBank&BirgunjFinance
KasthamandapDevBank&ShikharFinance
BusinessDevBank&UniversalFinance
MachhapuchchhreBank&StandardFinance
GlobalBank&IMEFinancialInstitution&LordBuddhaFinance
InfrastructureDevBank&SwastikFinance
AnnapurnaFinance&SuryadarshanFinance
PashupatiDevBank&UdyamDevBank
BFIsthat
have
Received
Final
Approval
FromNRB
AlpicEverestFinance&ButwalFinance&CMBFinance
ViborDevBank&BhajuratnaFinance
PremierFinance&ImperialFinance
LoI
Received
AranikoDevBank&SuryaDevBank
BFI Merger History in Nepalinance and Laxmi Bank – 2061 BS
adesh Bank and NB Finance – 2065 BS
nance and National Finance – 2066 BS
a Merchant Bank and NB Bank – 2067 BS
duces Merger Bylaws in 2068 BS
Himchuli Bikas Bank & Birgunj Finance
asthamandap Dev Bank & Shikhar Finance
Business Dev Bank & Universal Finance
achhapuchchhre Bank & Standard Finance
& IME Financial Institution & Lord Buddha Finance
frastructure Dev Bank & Swastik Finance
napurna Finance & Suryadarshan Finance
Pashupati Dev Bank & Udyam Dev Bank
erest Finance & Butwal Finance & CMB Finance
Vibor Dev Bank & Bhajuratna Finance
Premier Finance & Imperial Finance
HISEF Finance and Laxmi Bank – 2061 BS
Nepal Bangladesh Bank and NB Finance – 2065 BS
Narayani Finance and National Finance – 2066 BS
Nepal Sri Lanka Merchant Bank and NB Bank – 2067 BS
NRB introduces Merger Bylaws in 2068 BS
Kasthamandap Dev Bank & Shikhar Finance
Machhapuchchhre Bank & Standard Finance
Global Bank & IME Financial Institution & Lord Buddha Finance
Infrastructure Dev Bank & Swastik Finance
Annapurna Finance & Suryadarshan Finance
BFIs that
have
Received
Final
Approval
From NRB
Alpic Everest Finance & Butwal Finance & CMB Finance
LoI
Received
pal Bangladesh Bank and NB Finance – 2065 BS
rayani Finance and National Finance – 2066 BS
Sri Lanka Merchant Bank and NB Bank – 2067 BS
RB introduces Merger Bylaws in 2068 BS
obal Bank & IME Financial Institution & Lord Buddha Finance
Nepal Bangladesh Bank and NB Finance – 2065 BS
Narayani Finance and National Finance – 2066 BS
Nepal Sri Lanka Merchant Bank and NB Bank – 2067 BS
NRB introduces Merger Bylaws in 2068 BS
Global Bank & IME Financial Institution & Lord Buddha Finance
BFIs that
have
Received
Final
Approval
From NRB
LoI
Received
As of July 18, 2012

Merger of Machhapuchchhre Bank and
Standard Finance

MBL and SFL Merger Details
 Capital Structure:
 New paid-up capital of Rs 2.47 billion and reserves of Rs 240 million
 Combined deposit of Rs 20 billion and credit of Rs 16.3 billion
 Market Penetration:
 Number of branches of new entity is 54 with 63 ATMs
 MBL had 39 branches and 62 ATMs before the merger
 Employee Merger:
 The new entity to have a total of 600 employees
 All the 120 employees of SFL to be retained
 Board of Directors formation:
 Of the 9 directors, 5 from MBL, 3 from SFL and 1 expert member.
 Share listing:
 After the merger, 24 million units of shares to be listed @ Rs 100 per
share

References
 http://laxmi.laxmibank.com/Aboutus.aspx
 http://www.gorkhapatra.org.np/gopa.detail.php?artic
le_id=32431&cat_id=29
 http://www.ekantipur.com/the-kathmandu-
post/2011/05/12/money/nrb-unveils-merger-
bylaws/221654.html
 http://www.thehimalayantimes.com/fullNews.php?he
adline=Market+propels+financial+institutions%27+m
erger++&NewsID=338897&fb_source=message

Merger and acquisition of BFIs in Nepal

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