IFIC Bank inks MoU to sell its stake in Nepalese bank

The IFIC Bank has recently signed a memorandum of understanding with a prospective buyer to sell its entire stake in Nepal Bangladesh Bank (NBB) but it is yet to disclose the buyer's name, according to IFIC's disclosure on Dhaka Stock Exchange website.

Nepalese newspapers, however, have reported that Chaudhary Group has expressed keenness to buy the IFIC Bank's shares in the Nepal-based bank after the central bank of Nepal rejected the buying proposal of NB Group – a major stakeholder in the bank.

Chaudhary Group is a multinational conglomerate headquartered in Nepal. It holds a major promoter share in Nabil Bank in the country.

Earlier, in July last year, IFIC Bank made public its decision to withdraw the investment from Nepal by selling its entire shares held in the NBB.

Md Mokammel Hoque, company secretary of IFIC Bank, told The Business Standard, "This is going to be a big deal. Other buyers from Nepal are causing disturbance. Therefore, we have an agreement with an organisation so that others cannot create problems."

Mentioning that the price at which IFIC Bank's shares in the NBB would be sold would be decided in consultation with the buyer, he said a sales and purchase agreement will be signed once the price is determined.

"After that, all the information will be communicated to the investors in detail."

Mokammel said they are withdrawing the investment from the NBB as business has been sluggish amid the Covid-19 pandemic.

Meanwhile, after the news of the MoU signing regarding the selling of IFIC shares in the NBB broke, the price of IFIC Bank's share rose 7.69% to Tk18.20 on the Dhaka Stock Exchange on Sunday.

On the other hand, NBB Bank's share price on the Nepal Stock Exchange has gone up by 30% over the past 15 days to stand at 408 Nepali rupees. At this rate, the value of IFIC Bank's investment in the NBB stands at around Tk1,180 crore.

However, according to the Annapurna Express – an English-language news portal of Nepal, NB Group first expressed interest in buying IFIC Bank's stake in the NBB. But the central bank of Nepal, Nepal Rastra Bank, rejected NB Group's application saying there are allegations of irregularities against it. The central bank of Nepal mentioned that it turned down NB Group's proposal to protect the interest of depositors.

IFIC Bank, in its announcement to sell its shares in the NBB, however, said that the existing promoters of the NBB would be given priority in the sale of shares.

As NB Group has been debarred, IFIC will be able to sell its shares to any promoter of banks but it must obtain approval from the central bank of Nepal in this regard.

Nepal Bangladesh Bank was established in 1994 as a joint venture between Nepalese NB Group and Bangladeshi IFIC Bank.

At present, IFIC has controlling power over the NBB, having three representatives in the bank's seven-member board.