Banks Under Pressure in Core Capital to Issue Preference Shares

Nepal Rastra Bank has granted permission to some banks and financial institutions, which are under pressure in their core capital, to issue perpetual non-cumulative preference shares.

Banks Issuing Preference Shares:

• Nabil Bank:

  • Share Name: Nabil 8% Perpetual Non-Cumulative Preference Shares.

  • Units Issued: 50 million units (at NPR 100 per share).

  • Issue Value: NPR 5 billion.

  • Dividend Rate: 8% (distributed only in profitable years).

  • Special General Meeting: Completed on Bhadra 17.

  • Status: To apply to Nepal Rastra Bank after approval from the general meeting.

• NMB Bank:

  • Units Issued: 30 million units (at NPR 100 per share).

  • Issue Value: NPR 3 billion.

  • Dividend Rate: 8.25%.

  • Board Meeting: Completed on Bhadra 14.

  • Status: Preparing to issue shares after obtaining approval from Nepal Rastra Bank.

• NIC Asia Bank:

  • Units Issued: 50 million units (at NPR 100 per share).

  • Issue Value: NPR 5 billion.

  • Dividend Rate: 8.5%.

  • Status: Proposal was returned after submission to Nepal Rastra Bank; now preparing to re-approve the proposal through a special general meeting and resubmit it.

• Kamana Sewa Bikas Bank:

  • Units Issued: 3.5 million units (at NPR 100 per share).

  • Issue Value: NPR 350 million.

  • Dividend Rate: 9%.

  • Status: Preparing to apply to Nepal Rastra Bank after approval from the general meeting.

Banks That Have Previously Issued Preference Shares:

• Everest Bank: 7% Convertible Shares (already converted to general shares).

• Agricultural Development Bank: Preference shares worth NPR 5.43 billion.

Conclusion:

This decision is expected to help meet the core capital requirements, ensure the financial stability of banks, and pave the way for further credit flow. Issuing preference shares will play a crucial role in improving the capital structure of the banks.