Kathmandu. In recent times, banks under pressure from capital funds have been relieved to be able to issue unissued preference shares.
Banks and financial institutions can apply to the Securities Board of Nepal (SEBON) for the issuance of preferential shares only after taking approval from Nepal Rastra Bank. Banks and financial institutions can issue preferential shares at a face value of Rs 100.
Banks and financial institutions will be allowed to issue preferential shares only to institutional investors with less than 50 members. Ordinary investors, securities entrepreneurs and mutual funds approved by the Securities Board of India are not allowed to invest in it.
The Securities Board of Nepal (SEBON) has so far granted permission to 6 banks to issue preferential shares. There are 5 commercial banks and 1 development bank.
The Securities Board of India (SEBON) initially allowed Nabil Bank to issue preferential shares worth Rs 5 billion. NIC ASIA Capital Limited has been appointed as the issue manager for the IPO issuance of 50 million units of shares at a face value of Rs 100. The dividend rate of this preference share of Nabil is 8%.
Similarly, NMB Bank Limited has been permitted to issue NMB Unissued Preferential Shares worth Rs 3 billion. NMB Bank has received approval to issue a total of 30 million units of preference shares at a face value of Rs 100. The dividend rate of the bank is 8.25 percent. Siddhartha Capital Limited has been appointed as the issue manager for the IPO issuance.
After this, Siddhartha Bank will issue preferential shares worth Rs 3.50 billion, Sanima Bank Rs 2 billion, Machhapuchchhre Bank Rs 3 billion and Kamana Sewa Bikas Bank Rs 350 million. Siddhartha, Sanima Bank and Machhapuchchhre Bank have 8.5 percent share while Kamana Sewa Bikas Bank has 9 percent share. Dividends for preference shares are distributed only in profitable years.
NMB Capital, Muktinath Capital of Sanima Bank, Laxmi Sunrise Capital of Machhapuchchhre Bank and NIMB Ace Capital of Kamana Sewa Bikas Bank have been appointed as the issue managers for the IPO issuance.
Some of the licensed banks have already sold their preferred shares while some are yet to be sold. Some more banks are also preparing to bring preferential shares.
