Himalayan Bank To Acquire Civil Bank In The Swap Ratio of 100:81
Wed, Jul 13, 2022 4:42 PM on Merger/Acquistion, Latest,
A Memorandum of Understanding (MoU) has been signed between the two pioneer banks of Nepal- Himalayan Bank Limited (HBL) and Civil Bank Limited (CBL) on Wednesday. Himalayan Bank has agreed to acquire Civil Bank at a swap ratio of 100: 81.
For instance, if a shareholder in Civil Bank owned 100 shares, his share in the combined company would be reduced to 81 shares.
Previously, the merger of Nepal Investment Bank (NIB) and Himalayan Bank was underway. The merger, however, was canceled due to shareholder disagreements, and most recently, NIB merged with Mega Bank in a 100:90 swap ratio.
Following the collapse of the merger with Nepal Investment Bank, Himalayan Bank was under pressure to amalgamate with another organization.
Himalayan Bank had been allowed a year by Nepal Rastra Bank (NRB) to amalgamate with another commercial bank9. Additionally, NRB had verbally instructed to take away the facility provided earlier if the amalgamation is not done within this month.
The current deputy chief executive officer of HBL is Mr. Ashok Rana while the chairman is Mr. Prachanda Bahadur Shrestha. Likewise, the current chairman of CBL is Mr. Pratap Jung Pandey and Sunil Pokhrel is the current CEO of Civil Bank.
Below is the financial highlights of both banks as of Q3 of FY 78/79.
| Third Quarter (Q3) - Fiscal Year 2078/79 | ||
|---|---|---|
| PARTICULARS (Rs'000) | CIVIL BANK | HIMALAYAN BANK |
| Share Capital | 9,075,844 | 12,968,725 |
| Retained Earnings | 942,896 | 493,146 |
| Reserves | 1,554,346 | 7,542,270 |
| Deposits from Customers | 90,704,099 | 165,313,225 |
| Loans & Advances to Customers | 83,936,172 | 150,412,975 |
| Net Interest Income | 2,455,287 | 3,36,19,25 |
| Impairment Charge/(Reversal) | 25,531 | 600,538 |
| Personnel Expenses | 1,015,183 | 1,187,897 |
| Operating Profit | 1,303,873 | 1,99,78,02 |
| Profit/(Loss) for the Year | 904,123 | 2,39,25,78 |
| Distributable Profit/ (Loss) after P/L Appropriation and Regulatory Adjustments | 426,882 | 486,721 |
| Capital Adequacy Ratio (CAR) | 15.81 | 12.4 |
| NPL | 0.99 | 0.99 |
| Credit to Deposit Ratio (CD Ratio) | 90.2 | 91.81 |
| Cost of Fund (%) | 7.21 | 7.7 |
| Base Rate (%) | 9.94 | 9.5 |
| EPS (In Rs.) | 13.28 | 14.31 |
| Net Worth per Share (In Rs.) | 127.52 | 161.96 |
| Qtr End PE Ratio (times) | 16.34 | 33.83 |
| Qtr End Market Price | 217 | 484 |
CAPITAL STRUCTURE AFTER ACQUISTION
| Share Capital (Rs. 000) | 20,320,158.64 |
| Retained Earnings (Rs. 000) | 1,436,042 |
| Reserves (Rs. 000) |
10,821,026.36 |
| Total Core Capital | 32,577,227 |
| Deposits from Customers (Rs. 000) | 256,017,324 |
| Loans & Advances to Customers (Rs. 000) | 234,349,147 |
| Profitability (Rs. 000) | 3,296,701 |
| Total Number of Bank Branches | 159 |
Paid-Up Capital
The paid-up capital of HBL at the present is Rs.12.96 Arba. Meanwhile, the paid-up capital of CBL is Rs. 9.07 Arba. After the acquisition, the total paid-up capital of the new company will Rs. 20.32 Arba. Likewise, the reserves of the new company will be Rs. 10.82 Arba.
Business
The total deposits gathered from customers of the new company will be Rs. 2.56 Kharba. Similarly, according to the Q3 reports, Himalayan banks would forward Rs. 2.34 Kharba in loans after the acquistion.
Branches and Extension Counters
The agreement between these two banks will no doubt result in a wider network to support business growth.
Himalayan Bank will now have 159 branches. The bank will also have 227 ATM terminals and 12 extension counters.
Profitability
In the third quarter of the fiscal year 2078/79 alone, their combined net profit totals a staggering Rs. 3.29 Arba.
After the acquisition agreement, there is no doubt that the business and profitability will expand. The bank’s paid-up capital, deposits, loans, and advances will be increased significantly. The total number of A-Class banks will come down to 23.
Since this is an amalgamation in the nature of purchase or acquisition, only civil bank share trading will be halted and the last trading price is Rs 213.
