Laxmi Bank (LBL) and Sunrise Bank (SRBL) have signed a Memorandum of Understanding (MOU) to undertake merger between the two banks. The agreement was signed amidst a ceremony by Raman Nepal, Chairman of Laxmi Bank and Motilal Dugar, Chairman of Sunrise Bank. The signing ceremony was attended by members of Board of Directors, major shareholders, Chief Executive Officers and other executives from both the banks.
A Joint Merger Committee has also been formed to take the merger process further. The Joint Merger Committee comprises of directors Dr. Manish Thapa and Swati Roongta from Laxmi Bank and directors. Sharada Sharma and Deepak Nepal from Sunrise Bank. A Due Diligence Auditor will soon be appointed for detailed due diligence audit of both the Banks.
The merger process will formally commence after receipt of Letter of Intent from Nepal Rastra Bank and is expected to complete by the end of the current fiscal year.
Highlights of Merger:
Paid-Up Capital
The paid-up capital of LBL at the present is Rs. 11.51 billion. Meanwhile, the paid-up capital of SRBL is Rs. 10.11 billion. After the merger, the total paid-up capital of the newly merged company will Rs. 21.62 billion. Likewise, the total reserves and surplus of the merged company will be Rs. 12.4 billion.
Business
The total deposits gathered from customers after the merger will be Rs. 2.65 billion. Similarly, according to the Q1 reports, these two banks would forward Rs. 2.48 billion in loans after the merger.
Following the merger, there is no doubt that the business and profitability will expand. Upon the merger, the bank will have an increased level of paid up capital, deposits, loans and advances. The closing price of LBL and SRBL stands Rs 206.90 and Rs 202 respectively in NEPSE.
After a successful acquisition of Nepal Bangladesh Bank by Nabil Bank, 10 other commercial banks signed MoU for merger/acquisition earlier this year. Himalayan Bank acquired Civil Bank, whereas Prabhu Bank acquired Century Commercial Bank. In the same vein, Nepal Investment Bank and Mega Bank merged and Global IME and Bank of Kathmandu merged with each other. Also, Nepal Credit and Commerce Bank Limited and Kumari Bank Limited merged and have already conducted joint transactions.
Now after the merger of LBL and SRBL, the total number of commercial banks in Nepal is reduced to 20.
