As institutions with strong capital base have been showing more interest in acquiring another institution rather entering a merger, Nepal Rastra Bank has decided to open the doors for acquisition.
Saying that the policies regarding purchasing of other banks and finance institution were not clear, banks with huge capital base had been urging NRB to bring more flexible and clearer acquisition policy.
The new monetary policy that NRB is going to release in the first week of Shrawan has been tipped to contain separate provisions on regarding acquisition.
In absence of clear acquisition policies, some big banks have had to merge with smaller banks with disproportionate asset and capital base. While entering merger, it is mandatory to appoint the representatives of the shareholders of other institutions into the Board of Directors and take in their employees, which is unappealing for bigger institutions.
On the other hand, acquiring a smaller regional bank is beneficial for large banks because they get ready-to-move-in set up and do not have to spend huge money and efforts to create a market.
Acquisition would guarantee expansion of network and customer base for big banks.
Saying that the policies regarding purchasing of other banks and finance institution were not clear, banks with huge capital base had been urging NRB to bring more flexible and clearer acquisition policy.
The new monetary policy that NRB is going to release in the first week of Shrawan has been tipped to contain separate provisions on regarding acquisition.
In absence of clear acquisition policies, some big banks have had to merge with smaller banks with disproportionate asset and capital base. While entering merger, it is mandatory to appoint the representatives of the shareholders of other institutions into the Board of Directors and take in their employees, which is unappealing for bigger institutions.
On the other hand, acquiring a smaller regional bank is beneficial for large banks because they get ready-to-move-in set up and do not have to spend huge money and efforts to create a market.
Acquisition would guarantee expansion of network and customer base for big banks.
source: sharesansar.com
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