Machhapuchchhre, Standard Finance to operate as merged entity from today

KATHMANDU, July 9: The consolidated unit of Machhapuchchhre Bank and Standard Finance Limited will officially start providing banking services from Monday. The merged entity, which will have a paid-up capital of Rs 2.47 billion, will be known as Machhapuchchhre Bank Limited.

“The decision to merge the two units was made keeping in view the long-term business strategy of both the institutions,” Surya Bahadur KC, chairman of the bank, told a press conference organized in Kathmandu on Sunday.

The merger, dubbed the biggest in the country´s banking history, is expected to benefit Machhapuchchhre the most, as the category ´A´ financial institution, which was struggling to expand its business operations due to huge chunk of bad debts, has received a much needed capital injection from the consolidation process.

“The new bank will now have a capital adequacy (a measure of financial strength of a financial institution) of around 12 percent (as against the central bank´s requirement of 10 percent),” SR Pandey, a chartered accountant who finalized the merger details, told media. “This surplus of around two percentage points in capital adequacy will allow the bank to lend billions of rupees in loans.”

The merger has also allowed Machhapuchchhre to boost its reserve fund to Rs 240 million from 140 million in the past, while deposits have soared to Rs 20.74 billion from Rs 18.12 billion in the past.

The merger has not led to drastic changes in the core management team of Machhapuchchhre, with Bhaikajee Shrestha, who was earlier leading the bank, retaining the position of CEO at the consolidated unit as well. Umesh Singh Bhandari, CEO of Standard Finance, has agreed to assume the post of assistant general manager.

“Other staff members of both the institutions have also been accommodated in an amicable manner,” Bhandari said, informing the merger has not resulted in retrenchment of the workforce.

Prior to the merger, Machhapuchchhre had 480 staff members while Standard Finance had 120. “All of them have been given one or the other position in the new unit,” Bhandari said. “However, staff members deputed in four or five areas, where both institutions have presence, need to be moved once the branch offices in those locations are relocated.” Earlier, Machhapuchchhre had 39 branches while Standard had 15.

Regarding equity composition, the consolidated units will have 66.56 percent promoter shares, with the rest 33.44 percent of the stake belonging to public shareholders.

“Shares of Standard Finance, however, have been valued at Rs 85 each for every Rs 100 worth of shares,” Bhandari said

Source: Republica