KATHMANDU, July 23: Nepal Bank Limited (NBL) has initiated the process of relisting the state-controlled category ´A´ financial institution on the stock market to expedite the process of raising funds through issuance of rights shares.
“If things go according to plan, the bank will be relisted on stock market by the end of August or the beginning of September,” Maheshwor Lal Shrestha, the bank´s coordinator, said.
Earlier in June, the bank had appointed Civil Capital Market as share registrar, as per which the company is converting manual records on the institution´s share transaction into electronic form.
“This task is already complete and we are currently verifying the data we have inserted,” Civil Capital CEO Bhishma Raj Chalise said, informing, “The process of relisting the bank on Nepal Stock Exchange (Nepse) will formally begin once the electronic record of shares that changed hands till date is prepared”.
The bank, with a negative net worth of Rs 4.32 billion, was delisted from Nepse in June 2008 based on the request from the financial institution itself, following its enrolment in the financial sector reform program.
“Since the bank was delisted, it will have to follow all the process pursued by a company that is listing on the stock market for the first time,” an official of Nepse told Republica, adding, “The process isn´t complicated at all”.
In this regard, the bank has initiated talks with Nepal Rastra Bank, the central bank, Securities Board of Nepal, the securities market regulator, and Nepse. The regulatory bodies and the operator of the country´s only stock market have given positive response to the bank.
“Once the bank is relisted, the process of issuing rights shares to replenish our capital will begin immediately,” Shrestha said.
The bank is currently planning to issue 1:9.5 rights shares. This means, holders of every share of the bank will have to purchase 9.5 additional shares. The bank is expecting to raise Rs 3.62 billion from this process. Of this amount, Rs 1.39 billion has already come from the government.
The government, which is one of the bank´s major shareholders, currently holds 40.19 percent stake in the category ´A´ financial institution. Other shareholders of the bank, among others, include: public, who hold 49.94 percent stake in the bank, other category ´A´ financial institutions, which hold 4.92 percent stake in the bank, and other financial institutions that hold 3.42 percent stake in the bank.
However, injection of capital raised through rights issue will not convert the bank´s negative net worth into positive.
To add more capital, the bank has also initiated the process of selling its fixed asset, through which around Rs 2 billion is expected to be raised.
“The bank will finally have a positive net worth once the process of selling fixed assets is complete,” Shrestha said.