Nepal Investment MEGA Merger With Mega Bank ; Swap Ratio To Be 100 : 90

Finally, the head of Nepal Investment Bank Limited (NIB) and Mega Bank Nepal Ltd. (MEGA) have signed  a merger agreement today evening at Hotel Aloft to become one of the biggest bank of Nepal 

Preliminary, the swap ratio for NIB and MEGA is said to be 100:90, implying that the number of MEGA shareholders will decrease by 10%.

For example, if a shareholder of Mega Bank had 100 shares then his shares would be reduced to 90 shares in the newly merged company. However, the shares of NIB shareholders would remain unchanged in the new company.

As a result, secondary market trading of both NIB and Mega Bank will be suspended in the NEPSE from coming Monday i.e. from Jestha 30, 2079, onwards. 

The Chairman and the CEO of the merged entity will be Mr. Prithvi Bahadur Pande and Mr. Jyoti Prakash Pandey, according to the agreement. The name of the newly combined company is stated to be Nepal Investment Mega Bank Limited.

Earlier, NIB had signed a merger agreement with Himalayan Bank Limited (HBL) which unfortunately was abandoned due to a shareholder dispute of HBL over the pre fixed 1 : 1 swap ratio. 

Nepal Investment Bank and Himalayan Bank Abandon Merger Plan to Become Biggest Bank in Nepal

Below is the financial highlights of both banks as of Q3 of FY 78/79. 

As per the source, the swap ratio for NIB and MEGA is said to be 100:90, implying that the number of MEGA shareholders will decrease by 10%.

For example, if a shareholder of Mega Bank had 100 shares then his shares would be reduced to 90 shares in the newly merged company. However, the shares of NIB shareholders would remain unchanged in the new company.

Paid-Up Capital

The paid-up capital of NIB at the present is Rs. 18.3 Arba. Meanwhile, the paid-up capital of MEGA is Rs. 16.1 Arba. After the merger, the total paid-up capital of the newly merged company will Rs. 32.81 Arba after adjusting the 10% of Mega Bank’s current capital. Likewise, the reserves of the merged company will be Rs. 19.6 Arba.

Business

The total deposits gathered from customers after the merger will be Rs. 3.27 Kharba, beating the deposits acquired by Nabil Bank following the acquisition of Nepal Bangladesh Bank (NBB), which are anticipated to be Rs. 3.17 Kharba. Similarly, according to the Q3 reports, these two banks would forward Rs. 3.12 Kharba in loans after the merger.

Branches and Extension Counters

The merger between these two banks will no doubt result in a wider network to support business growth.

Immediately after the joint operation, there will be 295 branches. The bank will also have 271 ATM terminals, 46 extension counters and and 118 branchless banking points. Also, there will be 10 revenue collection counters of the bank. 

Profitability;

In the third quarter of the fiscal year 2078/79 alone, their combined net profit totals a staggering Rs. 4.49 Arba. Based on the third quarter's net profitability figure, the earnings per share of the merged entity would be Rs 18.24.

Following the merger, there is no doubt that the business and profitability will expand. Upon the merger, the bank will have highest paid up capital, deposits, loans and advances.  The total number of A Class banks will come down to 25. 

The closing price of NIB and Mega stands Rs 265 and Rs 226 respectively.