Vibor Bikas Bank (VBB) and Bhajuratna Finance & Saving Company (BFSC) on Thursday signed a memorandum of understanding (MoU) for merger. VBB Chief Executive Officer Ajay Ghimire and BFSC Director Rup Jyoti signed the pact.
After the completion of the merger, the new entity will be known as Vibor Bikas Bank with a paid-up capital of Rs 680 million. As per the MoU, the bank will immediately go for right share issuance to increase its capital to Rs 1.36 billion.“There will be two different right share issuances for public shareholders and promoter shareholders,” said Ghimire. The ratio of promoter share-to-public share after the rights share issuance will stand at 61:39.
Both institutions plan to complete the merger process within six months. They will call a special annual general meeting (AGM) within a month to get the merger plan approved by shareholders.
Jyoti said BFSC was also looking for a partner for merger in order to reorganise its capital structure. “As per the NRB regulation, single family/organisation is not allowed to hold more than 15 percent promoter share in a financial institution,” said Jyoti.