Three prominent commercial banks—Nabil Bank, Prime Bank, and Citizens Bank International—are moving forward with plans to merge with similar financial institutions. These steps were recently endorsed during their respective Annual General Meetings (AGMs), setting the stage for a long-anticipated wave of consolidation in Nepal’s banking sector.
Nabil Bank’s AGM, held on December 12, granted the board the authority to proceed with merger and acquisition (M&A) agreements or to engage foreign strategic partners. The board was also empowered to appoint valuators to assess the bank’s financial position, including its fixed and movable assets and liabilities.
Prime Bank’s AGM, on December 4, authorized its board to explore M&A opportunities with other banks and financial institutions (BFIs). Similarly, Citizens Bank International’s AGM on October 29 approved a proposal for merger and acquisition, allowing its board to engage recognized valuators for the unification process.
The push for mergers is part of a broader consolidation trend initiated by the Nepal Rastra Bank (NRB). The central bank introduced Merger Bylaws in 2011 and began actively encouraging BFIs to merge starting in fiscal year 2016/17. Since then, 239 BFIs have opted for mergers or acquisitions.
At its peak, Nepal had 33 commercial banks. However, NRB’s directive to increase paid-up capital spurred a wave of unifications, reducing the number to 20. Similarly, the number of development banks has dropped from 88 to 17, while finance companies and microfinance institutions now stand at 17 and 64, respectively—significantly fewer than their previous totals.
The landmark merger between NIC Bank and Bank of Asia in 2013 marked the first major consolidation among commercial banks. To further incentivize such mergers, NRB introduced additional benefits for unified entities last year.
Former NRB Governor Chiranjeevi Nepal highlighted the importance of these mergers, emphasizing their role in safeguarding the long-term stability of Nepal’s banking sector while protecting depositors’ interests. He noted that, given the scale of Nepal’s economy, 12 to 15 commercial banks would suffice to meet the country’s financial needs.
