Janata shares oversubscribed, listing in 2 months

KATHMANDU, May 6, 2012

Janata Bank´s shares were oversubscribed by more than two times by the time it wrapped up its initial public offering (IPO) on Friday.

The 27th commercial bank, which floated 6 million units of shares with face value of Rs 100 each, had collected Rs 1.4 billion and still counting at the time when this news was filed Friday evening. The amount is way past the target of Rs 600 million which the bank had planned to raise from the primary market.

“We are very overwhelmed by the response we got from the public,” Bijay Pant, an overjoyed CEO of Janata Bank, told Republica, expressing hope the shares would be oversubscribed by over three times by the time final figures are tallied. “This sends a positive message to the capital market at a time when investor confidence is at an all time low,” he said.

The country´s IPO market has currently hit the rock bottom, with only four companies, including Janata, reaching the primary market to raise capital this financial year, as against 16 last fiscal year. Even those that reached the market - except Janata - faced problems while raising capital, as share investment is being avoided due to steep fall in stock prices of most of the listed companies.

Janata Bank was also skeptic about launching the IPO in this climate. But because of its status as a commercial bank and one-and-half-month-long roadshows that were conducted prior to the IPO, Janata was able to attract investor interest.

“We travelled from east to west of the country to generate awareness about stock investment,” Srijesh Ghimire, CEO of NMB Capital, one of the issue managers for Janata Bank, told Republica, referring to roadshows carried out in places from Biratnagar, Birtamod, Dharan, Birgunj, Narayangad, Pokhara, to Damauli, Baglung, Butwal Bhairahawa, Nepalgunj and Dhangadi.

“We had never resorted to such a measure to sell shares of a commercial bank,” Ghimire said and expressed happiness as the hard work had finally paid off.

Oversubscription is generally good news for firms launching IPOs. But it makes investors, especially retail, uncomfortable, because they fear they might not be able to purchase shares, as companies resort to lucky draw to allocate stocks.

To address the problem, the Securities Board of Nepal (Sebon), the securities market regulator, recently introduced a new provision under which shares should be distributed on proportional basis. This provision means every person who has applied for shares will not have to return empty handed.

Janata Bank plans to list its shares on the stock market within two months.

Source: Republica

Gold import through hand carry should be more relaxed

KATHMANDU, May 6, 2012

Citing their inability to supply gold during marriage and festive seasons, yellow metal dealers have urged the government to open import of gold through hand carry, allowing Nepalis residing abroad for at least six months to bring in as much as 5 kg of gold to manage supplies.

Though dealers presently receive 20 kgs of gold from the commercial banks, as provisioned by the Nepal Rastra Bank, they claimed the supply was falling far short to meet local demand, which soars during marriage season and festivals.

“The ceiling set by the central bank is fine for off seasons. But as we have marriage season and other festivals almost every alternative month, we have consistently failed to manage supplies with the volume supplied to us,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers Association (Negosida).

While the frequent scarcity has been troubling consumers, both in terms of supply as well as fair pricing, dealers too have been complaining that it has been affecting their businesses during peak demand period.

Referring to such a situation, the association had recently held talks with senior NRB officials to resolve the problems. But after the central bank declined to help, say gold import in just 8 months of 2011/12 has already crossed over Rs 16 billion - which is higher than its liking, the association has knocked on the doors of Ministry of Finance (MoF).

“We are not seeking immediate changes in the provision. But given that gold holds special meaning in individual and social life, there has to be some permanent solution to the current problem. Hence, our push for change is from the new fiscal year,” said Shakya.

Presently, the government allows Nepalis to bring in only up to 350 grams of gold through hand carry luggage. Till a few years ago, Nepalis residing abroad for more than 6 months were allowed to bring in as much as 10 kgs of gold through hand carry.

But after the import suddenly rose to over Rs 41 billion in 2009/10, which contributed in a sharp rise in trade deficit and depletion of foreign currency reserve, the government tightened its import.

Though Nepalis in recent years, particularly after stock and real estate market slide, started putting in their money on gold to take profit out of soaring international prices, NRB had primarily assessed that unprecedented rise in import was due to illicit outflow of yellow metal to India, where import duty was much higher than in Nepal.

Following such assessment, the government jacked up the import rates and also lowered the import through hand carry to 1 kg per person in 2010/11 and further limited it at 350 grams per person in this fiscal year.

As lowering import limit through hand carry raised transaction cost, dealers are barely getting any supply though that source.

“The provision has helped the economy greatly, but turned the market jittery. Unfortunately, this is giving rise in illicit inflow of gold during seasons when demand rise, distorting prices and also resulting in massive outflow of Indian rupee,” said Shakya, pushing for the relaxation in the provision.

Source: Republica

Govt hikes gold import duty to Rs 2,300

The government has once again hiked the import duty on gold in a bid to control smuggling of the yellow metal to India.

A Cabinet meeting on Thursday decided to increase the duty by Rs 800 per 10 grams to Rs 2300. The government had last hiked the tax in February—from Rs 1,000 per 10 grams to Rs 1,500.

This is the fourth time in two years that the duty has been jacked up. Two years ago, the duty was at Rs 130 per 10 grams.

The fresh hike in gold import duty is expected to send the price of the precious metal soaring. Gold was traded at Rs 47,495 per 10 grams on Thursday. “The latest duty increment will push the gold price higher,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealer’s Association (Negosida), which determines the gold price in the local market.

After India hiked gold import duty by two folds in mid-March, there was a surge in smuggling of gold from Nepal to India. Traders had been complaining that the difference between duties in Nepal and India encouraged gold smuggling to the southern neighbour, leading to a shortage here.

Gold smuggling is also related to the illicit trade of the Indian Currency (IC) prevailing in bordering areas. Black marketers sell the IC—earned from selling gold in India—at high exchange rates in bordering areas. This is one of the major reasons behind increased gold smuggling, according to traders. “The latest government decision will address gold shortage in domestic market,” said Shakya.

The government has maintained a quantitative restriction on gold import since 2010 after massive imports led to a negative balance of payments. The gold import quota is presently 20 kg daily. Gold traders say as the import duty in Nepal was lower than that in India, half of the 20kg gold was being smuggled to the southern neighbour.

Each time India raises the customs duty on gold imports, Nepal faces pressure to adjust the duty here to control smuggling.

Source: Kantipur

Gold hits all-time high of Rs 48K per 10gm

KATHMANDU, MAY 05, 2012

Gold price hit an all-time high of Rs 48,010 per 10 gm (Rs 56,000 per tola) on Friday, jumping Rs 514 per 10 gm overnight.

The price was at Rs 47,495 per 10 gm on Thursday. The previous record was Rs 47,580 per 10 gm set on Nov 30, 2011.

The latest surge in the price is due to the hike in gold import duty, said Tej Ratna Shakya, chairman of Nepal Gold and Silver Dealers Association (Negosida). A Cabinet meeting on Thursday increased the duty to Rs 2.300 per 10 grams.

After India hiked gold import duty by two folds in mid-March, there was a surge in smuggling of gold from Nepal to India. Traders had been complaining that the difference between duties in Nepal and India encouraged gold smuggling to the southern neighbour, leading to a shortage here. “The latest hike in import duty has discouraged smuggling of gold to India,” said Shakya.

Gold smuggling is also related to the illicit trade of the Indian Currency (IC) prevailing in bordering areas. Black marketers sell the IC—earned from selling gold in India—at high exchange rates in bordering areas. This is one of the major reasons behind increased gold smuggling, according to traders. According to Shakya, gold supply in domestic market eased from Friday.

Source: Kantipur

Three Chinese firms in bid to build new Pokhara airport

KATHMANDU, MAY 05, 2012

The Civil Aviation Authority of Nepal (CAAN) received only three confirmed bids to develop the much-talked about regional international airport at Chinnedanda, Pokhara as the tender deadline ended Friday afternoon.

Out of the 10 Chinese firms that obtained bid documents, three, China CAMC Engineering Co, Sinohydro Corporation and China International Water and Electric Corporation, have returned them to CAAN. According to CAAN, all the three bidders are listed by the China International Contractors Association, an international project contracting company approved by the Ministry of Commerce of China.

According to CAAN, the tender documents will be processed after it holds its board meeting. However, that may take some time as the Minister of Tourism and Civil Aviation is the board’s chairperson and a new minister is yet to be appointed.

“After the board meeting, the technical and financial aspects of the contractors will be evaluated to select the finalist,” said CAAN’s Deputy Director General Suman Shrestha.

The lowest bidder will be awarded the contract after assessing the bid documents. Under technical eligibility, the bidder should have at least 10 years’ experience in infrastructure projects and shall have completed at least one airport project including communication and navigational aids equipment with installation outside or within China and a project cost of at least US$ 120 million. Similarly, under financial eligibility, the bidder should have liquid assets or availability of credit facilities of not less than US$ 20 million. Shrestha said that CAAN would select the lowest bidder and recommend the firm to its line ministry. The ministry will forward the selected firm’s name to the Finance Ministry which will then start loan negotiations with the Export-Import Bank of China (Exim Bank). The government plans to develop the airport with a soft loan of around US$ 145 million from Exim bank.

In 1975, the government acquired more than 3,106 ropanis of land to build the planned airport. The government and the Japan International Cooperation Agency conduct a detailed study in 1989.

The study had proposed a 2,500 m long and 50 m wide runway, a terminal and a cargo building.

Construction of the airport, which was expected to be completed in four years, was estimated to cost of US$ 39.6 million at the time. A new study has estimated that the project will now cost more than US$ 180 million.

CAAN invited bids for execution of the project under the engineering procurement and construction (EPC) model on Feb 9 and extended the deadline twice.

The EPC plan allows participation of Chinese companies or joint ventures between Chinese and Nepali companies with the Chinese partner holding more than 50 percent of the shares.

Source: Kantipur

Pokhara Sub-Metropolis Office to collect tax through banks

POKHARA, May 5, 2012

Taxpayers of Pokhara will soon be able to pay tax through banks, a move that aims to make the process transparent and convenient. Prime Commercial Bank is opening a counter in the premises of Pokhara Sub-Metropolis after which tax payers will be able to directly make the payment.

Sub-Metropolis decided to have the counter after repeated complaints from the public regarding irregularities of the employees in tax department of the office. They were charged of issuing fake receipts and of decreasing amounts paid by the taxpayer.

After the agreement with the sub-metropolis office and permission from the central bank, Prime Commercial Bank is bringing the payment counters into operation from mid-May.

Tilak Paudel, Executive Officer of Pokhara Sub-Metropolis Office said taxpayers will no longer have to complaint about the fake receipts. Paudel even claimed that the office was the first in the country to have bank counter for collection of tax. “As all the process will be computerized, the process will be transparent,” added he.
The office collects land, property and business taxes from city dwellers worth around Rs 90 million annually.

The office had taken action against employees involving in irregularities and had also recouped the amount from them in the past.

Under the agreement with the bank, sub-metropolis office will have to open salary account of all its employees and account of consumer committee in Prime Commercial Bank. At present, 355 employees are working in the office and total salary of Rs 4.7 million is paid by the office every month. Likewise, the bank has also agreed to provide interest rate of 8 percent on daily basis in collected tax amount.

“Although we don´t have direct benefit by establishing a counter here, we can directly come in touch with a potential customer through the counter,” branch manager of the bank, Sailesh Shrestha said.

Source: Republica

Janata primary issue gets oversubscribed

KATHMANDU, MAY 4, 2012
The primary market seems to have bounced back as Janata Bank Nepal’s public issue — the largest public offering from any private bank in the last two years — got oversubscribed within four days.

“Initial reports showed applications for shares worth Rs 700 million have already been collected at the collection centres but the final amount could be over Rs 1 billion,” informed chief executive of Civil Capital — one of three issue managers of the issue — Bhisma Raj Chalise.

The 27th commercial bank’s six million units of primary issue worth Rs 600 million at face value of Rs 100 per unit opened to the public on April 29. The issue is managed by three merchant bankers, Citizen Investment Trust, NMB Capital and Civil Capital.

The awful performance of the stock market had shadowed the prospects of primary issues in recent times. The difficulty in getting the issues subscribed even made the issuers postpone their Initial Public Offerings (IPOs). “We had conducted an initial study to gauge public reaction before the IPO was announced and found investors were willing to purchase shares belonging to commercial banks at par value,” he informed, adding, “That was why we were hopeful the issue would be subscribed within the given four days.”

The recent issue of Manjushree Financial Institution and Bagmati Development Bank took about one month to be fully subscribed. In August, 2011, Bhargav Bikas Bank’s IPO worth Rs 4 million did not get subscribed compelling its underwriter NMB Capital to purchase the shares.

However, lucky for Janata Bank its IPO was preceded by an overwhelming surge in the stock market, so much so, that even new investors flocked to buy the issue. Janata’s IPO was even blamed for the current backlash at the stock exchange that pushed the index down by about nine per cent as compared to last week’s closing.

The charm of this IPO comes after a long interval between the last public offering by a commercial bank and now. The last public offering by a commercial bank was in April 2010 of Agriculture Development Bank.

TDB’s IPO soon

Tourism Development Bank (TDB) has got approval from Securities Board of Nepal to float an Initial Public Offering (IPO) worth Rs 240 million. TDB will issue 2.4 million unit shares at face value of Rs 100. After the public issue, its capital will be Rs 640 million from the current Rs 400 million. The bank has appointed NCM Merchant Banking and Citizen Investment Trust as issue managers. The bank that had earned Rs 39 million operating profit by the third quarter has Rs 119.14 as networth per share.

 

 

Source: THT

NRB shifting international biz from Citi to StanChart

KATHMANDU, MAY 04 - 2012
After Citi Bank’s announcement that would not carry out business transactions with Nepal’s government and private agencies, the Nepal Rastra Bank (NRB) has decided to shift its international banking transactions to Standard Chartered Bank.

NRB officials said the central bank has already started shifting businesses such as international payment and payment against letters of credit to Standard Chartered.

“After Citi informed us that it will not do business with NRB and other

commercial banks a few weeks ago, we decided to shift our accounts and

businesses to Standard Chartered,” said a senior NRB official. “As Standard Chartered has one of the largest global networks, we had decided to go with it although other banks such as JP Morgan Chase were under consideration.”

Citing increased regulatory compliance cost against business volume, Citi decided not to do business with Nepal.

According to central bank officials, Citi was covering some 80-90 percent of NRB’s corresponding banking business. Over the last two years, the central bank had been conducting most of its international business transactions through Citi.

NRB officials say Standard Chartered is the best option as doing business with other international banks could be costly. “We will go for other banks if problems arise with Standard Chartered,” said the NRB official.

With NRB also making investment in US banks, including Citi, NRB has removed its investment in Citi Bank. “Although Citi has not told us that it will not take investment from Nepali banks, we have moved our investment from Citi after they matured,” said another NRB official.

Along with NRB, other commercial banks have also started shifting their businesses from Citi to other banks.

Source: Kantipur

NRB freezes assets of Gurkha Bank loan defaulters

KATHMANDU, MAY 04, 2012

The Nepal Rastra Bank (NRB) has decided to freeze fixed assets of Muna Housing & Developers and Lumbini Infrastructure Private Limited for defaulting big loans taken from now crisis-ridden Gurkha Development Bank.

NRB’s recent board meeting also decided to freeze assets of these companies’ promoters—Gyanendra Bahadur Thapa Magar of Muna Housing and Pashupati Nath Shukla and Nisha Sukla of Lumbini Infrastructure.

Muna Housing has to the pay around Rs 50 million, while Lumbini Infrastructure owes Rs 40 million to the bank, including interests, according to the central bank. An NRB official said they have also decided to take action against Gurkha officials involved sanctioning the loans.

Gurkha is struggling to recover bad loans—the major reason behind the crisis at the bank—as many of its defaulters are at large, according to Gurkha Chief Executive KK Bhattarai. He said the banks needs about Rs 1 billion to turn itself healthy.

The central bank has already frozen banks accounts and assets of bank Gurkha officials, including its former executive chairman Dambar Bahadur Bamjan and directors Nirmal Gurung, Dhan Prasad Rai, Dinesh Shakya, Mina Shrestha, Sanjeev Kumar Mishra, Mahesh Prasad Rijal and Ramesh Tamang.

Other officials include immediate general manager Rajendra Das Shrestha—who is also a promoter of the bank—immediate credit department chief Deepak Rana and former director Prabeen Naulakha.

Nepal Mentha Product Limited Managing Director Rakesh Adukiya, who is related to Gurkha’s promoter firm Krishi Premura Holding; loanees Sajeev Kumar Agrawal and Jeevan Ghimire; Adukiya wife Ruchi and Punam Khetan, directors of Krishi Premura, were also among those facing the central bank’s action.

Source: Kantipur

USA investors encouraged by Nepal's political development

Lorraine Hariton, the US State Department's Special Representative for Commerce and Business Affairs, has said Nepal's recently-achieved success on peace and constitution writing front has encouraged US investors.

"Though there are wait and see situations, the US is committed to work in Nepal with its new investment proposals," she said at an interaction organised by the Federation of Nepalese Chambers of Commerce and Industry (FNCCI) here on Sunday.

Saying that entrepreneurship development is key to sustainable economic development of a country, Hariton urged the Nepali private sector to concentrate on this area. Identification of entrepreneurs, development of business environment for them, introduction of appropriate laws and policy and access of market are the steps towards entrepreneurship development, said Hariton, who arrived in Nepal on Friday on a five-day visit.

"The maximum mobilisation of youth in economic activities will develop entrepreneurship in them and will foster the growth of national economy," she said, adding that her county would support youth entrepreneurship development in Nepal.

Worker scarcity forces govt to revise salary

KATHMANDU, MAY 1, 2012
Shortage of foreign job aspirants has forced the government to hike salaries in the destination countries in Gulf; Qatar, Saudi Arabia, the United Arab Emirates and Kuwait.

Ministry of Labour and Transport Management is revising salary structure upwards for Gulf states to attract potential job aspirants, said spokesperson at the ministry Buddhi Khadka. “We have increased salary from Saudi Riyal (SR) 600 to 800 SR,” he said adding that the revision of other destination countries is also on card.

“Gulf countries are offering lowest salary to Nepali workers, so it needs to be revised to attract more foreign job aspirants,” he said. “The ministry is increasing migrant workers’ salary to at least $250 (Rs 20,500) from current average $180 (Rs 14,760). The outsourcers have also agreed to increase salary in Saudi Arabia and the talks are going on to revise salary of other countries upwards,” Khadka added.

The ministry and outsourcing agencies have agreed to increase worker’s salary for Saudi Arabia to SR 1,000 including boarding facility, on Sunday.

Nepali embassy in Jeddah has advised government to revise salary upward last month after studying salary structure of migrant workers in the destination country. The study has revealed that Nepali migrant workers are getting the lowest salary compared to the workers from India, Sri Lanka, Philippines and African countries.

Nepali and Bangladeshi workers are found earning the lowest salary of around SR 800 ($210). However, Bangladesh is not in a mood to revise salary of gulf bound workers.

“We have agreed to increase migrant workers salary following workers’ shortage but it may back fire as the neighbouring countries are sending workers at a low salary,” said second vice president of Nepal Association of Foreign Employment Agencies Kumud Khanal.

According to him, Nepali outsourcing sector is in risk unless Nepal endorses Saudi Arabian government salary. “If Bangladesh and African countries supply workers at the current wage there will not be any demand for Nepali workers,” he said adding that it is hard to implement the decision.

He, however, suggested the government to start diplomatic efforts to revise migrant worker’s salary in other gulf countries and Malaysia. According to the association, outsourcers are getting sufficient workers according to the demand they have in hands. “Outsourcers have to visit villages to convince youths for foreign jobs. They have mobilised their agents in villages,” said president of the association Bal Bahadur Tamang. “But the department’s raid against agent’s offices have created problem,” he said, adding that they have above 100,000 demands in hands but only one-third of them has contacted for foreign jobs.

“Branches and agent’s office are illegal, according to Foreign Employment Act,” director general at the Department of Foreign Employment Purnachandra Bhattarai, said, agreeing that there is a shortage of foreign job aspirants but his drive is to protect the sector. “The government is ready to facilitate outsourcers according to the law but they should come forward,” he added.

Source: THT

Govt unveils tax card for enforcement of rent tax

KATHMANDU, MAY 1, 2012
Home owners in cities and urban centers would soon need a separate rent tax card and use it to settle rent, much in the same way as they pay utility bills through cards issued by various utility service providers.

Unveiling the new arrangement Inland Revenue Department (IRD) on Monday said it has made the possession and use of card mandatory for all landlords who enjoy income through rents.

“We are distributing the cards from Wednesday itself. All house owners in the Kathmandu Valley and outside must get it,” said Tanka Mani Sharma, director general of IRD.
Officials said the present campaign aims to motivate the taxpayers to voluntarily comply with the new arrangement. But eventually IRD envisages to make it mandatory, using it as a tool for enforcing rent tax - one of the least complied forms of tax in the country.

“In the medium term, those not possessing the card would be regarded as evading taxes and will be slapped fine,” said a source.

In order to make sure that landlords comply, IRD also issued a new directive. Those possessing the card would need to get it certified and sealed by the tax office once every year, a new provision which has been put in place to ensure compliance of rental tax.

Rental tax has been in place since decades and existing income tax law demands landlords earning rental income by leasing out the space of their building or land to pay 10 percent of the income as rental tax.

However, its compliance has been negligible. According to Sharma, except for the commercial buildings and landlords who have been renting the space to corporate entities and government offices, others have barely complied with the law nationwide.

Despite such situation, officials clarified IRD will not act tough against the non-filers until it bring a large number of rental taxpayers in its net and builds its won database.
To make it easy for taxpayers to get the card, Sharma said IRD has tied up with local bodies and will be distribute the cards from ward offices, taxpayers´ service center and Inland Revenue Offices (IROs) in the Valley and urban centers outside the Valley.

“Land owners in Kathmandu can get the card from 48 outlets, including 35 ward offices and 13 taxpayers´ service centers,” said he. In districts where taxpayers´ services do not exist, they can collect the card from local ward offices, municipality, sub-municipality and IROs.

In the initial phase, IRD plans to bring at least 25,500 rental taxpayers into its fold through the issuance of the card by mid-July, 2012. Of that, it targets to register at least 20,500 rental taxpayers in the Kathmandu Valley alone.

“In the new fiscal year we will also organize temporary camps, if required, in different parts of the country to reach out to the taxpayers,” Sharma stated.

Kedar Bahadur Adhikari, executive director of Kathmandu Metropolitan City (KMC) Office expressed hope that KMC, through the tie up, would also be able to enforce the 2 percent rent tax that it separately charges on the landowners.

Finance Minister Barsha Man Pun, who unveiled the new Directive on collection of rental tax, urged the house and other property owners to act in a civilized manner and pay due tax.

Although he did not categorically answer a question on how the fresh enforcement drive would impact the apartments´ rental charges, he said the rental tax was not new and has been around for decades. “It is just that we are enforcing it in a planned manner now,” said Pun said.

IRD officials, on the other hand, said it should not have any impact on rental charges.

Source: Republica

Govt allows Nepal Bank to sell fixed asset

KATHMANDU, May 1, 2012

The government has given green signal to state-controlled Nepal Bank Limited to start selling fixed assets to replenish its capital, while rejecting its proposal to waive off capital gains tax on sales of these assets.

The Ministry of Finance has said the technically bankrupt bank can sell fixed assets that are not in use in a phase wise manner and subsequently raise Rs 2 billion to fix its balance sheet which shows a negative net worth of Rs 4.5 billion.

However, it was asked to take into consideration the cabinet decision of June 2010 which does not allow public enterprises to sell fixed assets to the private sector.

“Because of this provision the entire process of selling fixed assets belonging to the bank has slowed down,” a person privy to the issue told Republica. “The issue has recently been settled as it has been acknowledged that the government is not a majority stakeholder in the bank and it should be exempt from the condition that solely applies to public enterprises, which according to the definition are companies in which the government is a majority shareholder.”

This has paved way for the bank to sell its fixed asset to the private sector as well.

Established in November 1937, Nepal Bank, a category ´A´ financial institution, is 40.19 percent owned by the government; public shareholders own 49.94-percent stake in it, and the rest is owned by banks, financial institutions and other institutions. Despite being a public entity, it failed to maintain good governance due to which its non-performing loan soared to 59 percent of the total credit portfolio by 2002. Since then it has undergone a reform program, which has bolstered its financial condition.

One of the indicators of its improved financial health is the proportion of bad debts, which stood at 5.17 percent of the total credit portfolio as of mid-January. But since it has a negative core capital of over Rs 4.5 billion it needs an injection of at least Rs 9.7 billion to do away with the negative net worth.

To replenish its capital, the bank is planning to raise Rs 4 billion through rights issue of which Rs 1.5 billion will come from the government. It is planning to raise another Rs 2 billion through sales of fixed assets.

Nepal Bank is estimated to have fixed assets worth around Rs 14 billion at current market price throughout the country. “The bank, however, has not finalized plots of land that would be put on sale, although it is looking at areas where real estate prices have not come down yet,” the source said.

As per the bank´s recapitalization plan, which has been approved by the central bank and the finance ministry, valuation and sales of land would be conducted in three phases.
So far, the bank has already conducted first phase of land valuation. The second and third phases of valuation works are scheduled to begin in mid-May and mid-July, respectively. Based on the valuation, the bank is planning to issue a tender notice within mid-May inviting interested parties to bid for land that it is planning to release under the first phase.

“But this process is likely to be delayed because of time taken to convince the government to let the private sector participate in the bidding,” the source said. This delay, in turn, is likely to affect the bank´s land sales plan under second and third phases which were supposed to begin in mid-June and mid-August, respectively.

Earlier, the bank had also requested the government to waive off capital gains tax on sales of these assets. But the finance ministry rejected the proposal. It has instead said the amount raised as tax would be invested in purchasing rights shares of the bank.

Source: Republica

Janata Bank IPO receives good response

KATHMANDU, APR 30, 2012

After a two-year hiatus, the capital market witnessed an Initial Public Offering (IPO) of a commercial bank with Janata Bank’s primary issue starting today.

“The response from the public is quite good and we expect to get all the issue subscribed within four days as estimated,” said Bhisma Raj Chalise, CEO of Civil Capital –– one of the three issue managers for Janata Bank’s IPO.

The bank has appointed Citizen Investment Trust (CIT), NMB Capital and Civil Capital as the underwriter and issue manager for the IPO worth Rs 600 million. The shares are available for the public at a face value of Rs 100 per unit share. This is the largest public issue by a private commercial bank.

The last public offering by a commercial bank was in April 2010 of Agricultural Development Bank. As the secondary market was still going strong, the issue was oversubscribed by 150 times in just three days of the opening of the IPO.

However, the continuous poor performance at the stock market has landed primary issues in a difficulty. Recent instances of IPOs of smaller development banks and finance companies hardly getting subscribed even in a month has cast a shadow on the reception of the bank’s public offering. The bank established two years back, is operating through 24 branches across Nepal.

The bank has a paid up capital worth Rs two billion and has 836 promoters. By the end of the third quarter of the current fiscal year, the bank earned Rs 43.7 million as net profit and its non-performing loans stand at 0.03 per cent.

Source: THT