Nepal-based Global IME Bank and Janata Bank have signed a memorandum of understanding (MoU) to merge their operations into a single entity.
The move is in line with Nepal Rastra Bank (NRB)’s push for banks and financial institutions to merge with or acquire suitable partners prior to the monetary policy announcement.
Global IME Bank chairman Chandra Prasad Dhakal said: “We have decided to enter into a merger looking into NRB’s plans, which will be announced through the Monetary Policy speech.”
Under the terms of the MoU, share exchange between the companies has been set at 1:0.85, which means that investors with 100 unit shares of Janata Bank Nepal will receive 85 unit shares of Global IME.
The swap ratio will be finalised after the due diligence audit (DDA) report.
Janata Bank’s Parshuram Kunwar will be the CEO of the merged entity, while Global IME’s acting CEO Mahesh Dhakal will be the deputy CEO.
The banks have agreed that the merged venture will retain the name ‘Global IME Bank’.
The banks’ management teams are expected to finalise all the required procedures within four months.
The third quarter report of fiscal 2018-2019 showed that the paid-up capital of Global IME and Janata Bank Nepal is around NPR10bn ($89.73m) and NPR8bn ($71.78m), respectively.
Moreover, the reserves and surplus of Global IME Bank and Janata Bank Nepal are said to be NPR5.12bn and NPR1.75bn, respectively.
After the merger, the combined entity’s paid-up capital is expected to be NPR18.39bn.