With an aim to be the largest and efficient commercial bank, Global IME had started merger with a few development banks and financial institutions. The process continued as Global IME merged with another commercial bank Commerz and Trust recently.
The newly merged Global IME Bank and Commerz and Trust Bank have started their operations as a Global IME Bank Ltd. After the merger of NIC Bank and Bank of Asia, this is the second merger of two commercial banks. Since its establishment, under the leadership of Chairman Chandra Prasad Dhakal, Global IME Bank has been a leading commercial bank in Nepal.
As the cost of operation of the banks is going high, the merger is also a way for them to reduce the operation cost and enhance their capacity to expand their services. This is what the new merger is expected to do to the Global IME.
To encourage banks and financial institutions to build their capacity to expand the services, Nepal Rastra Bank has been promoting mergers of the BFIs. The recent merger is supports Nepal Rastra Bank’s decision to make Nepal’s banking sector more efficient and coherent to manage the financial resources.
Inaugurating the bank, finance Minister Dr. Ram Sharan Mahat stressed the need that the banks and financial institutions (BFIs) should take the lead for economic development of the country. “The banking sector is a more sophisticated sector in comparison to other sectors of the economy. Thus, it should take the leading role rather than just following the economic development,” said Finance minister Dr. Mahat.
After the opening up the economy in 1990, Nepal has seen a surge of BFIs. Within a decade, the number of BFIs crossed three digits and many BFIs lost their competitive edge, because of high operations cost.
As Nepal’s banking and financial institutions now have liquidity surplus, they are yet to invest in the proper sector.
“BFIs will need to explore new sectors for lending. We need more investment to boost production and create more jobs. BFIs should help the country in this regard,” said finance minister Dr. Mahat.
“We are encouraging BFIs to undergo merger realizing that the growth in the number of BFIs failed to make banking services available across the country,” said Nepal Rastra Bank Governor Yuba Raj Khatiwada.“The merger policy aims to make the banking sector competitive, inclusive and intensive.We are also bringing acquisition policy to enable big and vibrant BFIs to acquire smaller BFIs.”
Chandra Prasad Dhakal, chairman of Global IME Bank, said: “It was the responsibility of the bankers to help the government in economic development. Global IME has been putting emphasis on retail banking ever since its establishment. We will continue this in the days to come.”
Global IME Bank has a paid-up capital of Rs 6 billion and customer base of more than Rs 500,000. It operates with 120 branches and 80 ATM locations. The bank has mobilized a total deposit of Rs 49 billion and made a loan investment of Rs 41 billion.
In the last two years, Nepal has seen the merger of one after another bank, particularly the development banks, and financial institution. However, it remains to be seen how the new entity will be able to adjust and survive.
As a pioneer bank to see a successful merger in the past, Global IME Bank will definitely show itself as an institution capable to handle the successful model for merger. As in the past, it is likely to make merger successful under the leadership of chairman Dhakal.