NB Bank rights shares auctioned

The rights shares of Nepal Bangladesh Bank (NBB) which found no takers during an earlier issuance have been picked up at Rs. 231 per share at auction.

The price is a little lower than the current market price of its stock which was traded at Rs. 255 per share on NEPSE on Monday.

NBB allotted the shares on Monday in accordance with its auction notice published on June 20. The bank had put up 366,761 units of shares for auction.

According to Awatar Neupane, NBB company secretary, the general public emerged the highest bidder for its rights shares. Those who bid more than Rs. 162 per share have been allotted shares, he said. The number of investors who have received rights shares has not been revealed.

As per a recent directive of the Security Board of Nepal (SEBON), unsubscribed rights shares were put up for auction.

Earlier, the employees and existing shareholders used to divide the remaining shares among themselves. SEBON introduced the new directive so that companies could collect more money through auction instead of distributing the stock among employees and existing shareholders.

With the new share allotment, the bank's paid-up capital will increase to Rs. 1.86 billion.

Earlier, Nepal Rastra Bank (NRB) had allowed NBB to issue rights shares to help it to increase its paid-up capital and reduce the holding of the NB Group in the bank.
The bank's financial condition is still not sound with the capital fund against risk weighted asset remaining still negative by 8.2 percent and its non-performing loans remaining at 29.9 percent, according to the bank's third quarterly report of the current fiscal year.

The capital fund must be positive by above 10 percent as per NRB rules and the NPL should be under 5 percent for a healthy bank.

There was also speculation that the bank could scrap the auction of its remaining shares as the number of quoted tenders had surpassed the sealed tenders.
According to sources, two bidders had enclosed eight more tenders in two sealed envelopes. However, the price of each tender was quoted. Neupane said, without giving details, that the issue was settled as per the legal provisions of the country. However, an official at NEPSE said the different tenders quoting different prices in a sealed envelope by a single person was accepted when Nepal Bank Limited had sold its shares in Standard Chartered Bank at auction a few years ago in order to end crossholding.

"The same tradition could have been followed," the official said.

Source: Ekantipur.com