Civil Bank Limited and Grand Bank Nepal Limited are actively seeking merger for a number of reasons, including close ties between promoters and managers, according to highly placed sources who have huge stakes in both commercial banks.
“Though the talks are in the preliminary stage, there is a very high chance of the merger between the two banks since they have been backed by promoters and managers with close bonding.
Formally, however, the bank officials would not accept or refute the news.
Kishore Maharjan is the CEO of Civil Bank while his father Krishna Lal Maharjan is one of the leading shareholders and former chairman of Grand Bank Limited.
Though Krishna Lal Maharjan was succeeded by Swarup Gurung Koney as the chair of Grand in August 2012, he is still among the top shareholders of the bank with 1.42 percent of the total stake, which amounts to Rs 2.83 crore, according to the bank’s annual report for the last fiscal year 2069/70.
The connection does not end there. He is also a good old friend of chairman of Civil Bank Ichchha Raj Tamang. Both of them had reportedly studied together in the former Soviet Union.
“In fact Tamang encouraged Krishna Lal Maharajan, who is son of his friend, to leave Sunrise Bank to lead Civil Bank when he decided to established it,” the source further said.
Another highly placed source said that Life Insurance Corporation of Nepal (LICN) has recently bought 2 lakh units of Grand Bank, and that the move was encouraged by the news that it was seeking merger with Civil Bank.
“The possible merger of the banks being promoted by groups with close ties was one of the factors that propelled LICN to buy the promoter shares for Grand Bank scripts which are relative cheaper in the market so that it can reap huge benefit in the long run,” the source added.
LICN had bought 2.24 lakh units of Grand Bank promoter shares at Rs 112 on March 17, the source further informed, adding that this move by a leading life insurance company promoted by the government of India itself shows the prospect of the bank.
Both the commercial bank have been actively seeking merger also to improve their financial health.
Civil Bank Limited, which finalized the merger with Civil Merchant Bittiya Sanstha and Axis Development Bank Limited earlier this month through special AGM, is starting the integrated business of the merged entity from Baisakh 1 i.e. April 14.