Kist Bank and Vibor Bikas Bank have agreed to merge, in a move that will support Jyoti Group’s bid to acquire the largest stake in Kist. Managing director of Kist Kamal Gyawali and Director of Vibor Bank Roop Jyoti signed a memorandum of understanding (MoU) for the merger recently.
Although Jyoti group has been in the financial sector for the last one and a half decades through Bhajuratna Finance, which was merged with Vibor last year, the group’s entry into Kist will ensure its prominent presence in the sector. The Jyotis are preparing to acquire a 12 percent stake in Kist from Guna Group, which holds 26 percent shares in the bank. Guna’s chief Rajendra Shakya is facing troubles in his real estate ventures.
Kist and Vibor have to complete the merger within six months after the signing of the MoU as per the merger guidelines issued by the Nepal Rastra Bank. According to the banks, a merger committee will be formed to fast-track the process and reputed auditors will be appointed to conduct due diligence audit (DDA). The swap ratio (the value of each Kist share against Vibor’s) will be maintained based on the DDA report, according to the banks.
“We purchased the public shares to give momentum to the merger process,” said Jyoti Group Vice-chairman Roop Jyoti. Vibor Properties, a Vibor Bank subsidiary, will be sold before the completion of the merger, while Vibor Capital will remain as Kist Bank’s subsidiary after the merger. “We are looking at a modality to sell the company,” said Vibor Director Ajaya Ghimire, who stepped down as the bank’s CEO after the merger decision.
As of the second quarter of this fiscal year, Kist has a paid-up capital of Rs 2 billion and deposit mobilisation of Rs 20.98 billion. The bank has extended Rs 17.59 billion loans and its capital adequacy ratio stands at 10.80. Kist incurred a loss of Rs 69.57 million in the second quarter.
On the other hand, Vibor has a paid-up capital of Rs 916.2 million, deposits worth Rs 2.86 billion. It has extended credit worth Rs 1.68 billion and its capital adequacy ratio is 13.75 percent.