NMB: Banking on Merger & Growth

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NMB: Banking on Merger & Growth

To emerge as a stronger player in the domestic financial market, NMB Bank is poised to conclude a four-year-long process that will merge into it three other banks and financial institutions.
Upendra Poudyal, CEO, NMB Bank
Upendra Poudyal
NMB Bank, a prominent commercial bank in the country, is on a mission to expand its foothold in the domestic market as well as enter the international markets that are important for Nepal. To emerge as a stronger player in the domestic financial market, NMB Bank is poised to conclude a four-year-long merger process that will merge into it three other banks and financial institutions. 
The bank’s Special Annual General Meeting (AGM) on June 7 approved the proposal to merge into it Pathibhara Bikash Bank Ltd, Bhrikuti Development Bank Ltd and Prudential Finance Company Ltd. The merged entity which will retain the name NMB Bank is expected to start integrated services from the second week of August. Similarly, NMB Bank has recently opened a representative office in Kuala Lumpur, Malaysia, with the aim to provide banking services to the Nepali migrant workers.
Upendra Poudyal, CEO of NMB Bank, is quite encouraged by these developments. “We had been discussing the merger for the past four years. Now the merger proposal has been endorsed by the bank’s Special AGM,” he says, “The merger of Pathibhara will give us a stronger foothold in the Eastern Development Region while Bhrikuti and Prudential will make us stronger in the Western Development Region.” The merger will add to the bank’s organic growth, increasing the bank’s capital as well as customer base, he adds.
After the merger, the bank will have one head office and 61 branch offices. The new Board of Directors of the merged bank will have seven members including three ordinary NMB Bank shareholders, one Employees Provident Fund representative, one representative each from the shareholders of Bhrikuti Development Bank and Prudential Finance Company Ltd. 
NMB Bank started off as a full-fledged A Class commercial bank six years ago. Today, the bank has a paid-up capital of Rs 2.4 billion and holds three percent market share in terms of deposits and lending. The shareholders and promoters of the bank come from different backgrounds including business house, successful businessman, Employees Provident Fund and a foreign company named Yong Lian from Malaysia. According to Poudyal, the bank’s vision is to establish itself as a leader in Nepal’s banking industry by providing a range of financial services with high priority on customer care and gain supremacy in growth, profit, customer care and social responsibility. Today, the bank boasts 12,000 satisfied customers. 
The bank emphasizes on providing innovative products and services to its customers and works on five Bs for success. They are:
• Be a team player and deliver result together
• Be innovative with the changing time
• Be responsible to our actions
• Be prudent for sustainable and consistent growth
• Be committed to deliver what we promise
NMBCL to NMB Bank 
NMB bank was previously known as NMB Capital Ltd (NMBCL) which was established in 1995. NMBCL, which played a vital role in merchant banking in Nepal, became the country’s first Class ‘C’ financial institution to upgrade directly to a Class ‘A’ commercial bank. CEO Poudyal shares the story. “In 2006, the government introduced the Banking and Financial Institutions Act (BAFIA). As per one of the provisions of this Act, a financial institution of lower class could be upgraded to ‘A’ Class bank if it had a capital base of Rs 1 billion. Then we decided to upgrade to a Class A bank as we had the required manpower, skills and capital base.”
The upgrade was achieved but there were worries. “There were worries that upgrading a Class ‘C’ financial institution directly to a Class ‘A’ commercial bank could create problem. But we were determined. The NRB, too, took our step positively and after the process of two years, we became a Class ‘A’ commercial bank in 2008,” shares CEO Poudyal, adding that the bank has been growing steadily since then.
Problems of Merging
“Merging four institutions in one go is technically not easy. The major problem lies in operational and cultural integration. The integration of IT systems, interest, and loan rates of four institutions is a very sensitive issue. Another thing is to create a new company ethos that can bring all four institutions together,” shares Poudyal, adding that the merged bank will retain almost all staff of four merging institutions “except for those who need retirement.”  
Vision 2020
NMB Bank has come up with a five-year growth plan titled NMB Vision 2020. According to CEO Poudyal, the bank’s merger drive is in line with this vision. “NMB Vision 2020 envisages the bank to be within first quartile amongst the commercial banks in the country both through organic growth and alternate options including mergers and acquisitions,” he says.  
Market Strategy
The bank focuses on retail banking and small and medium enterprises (SMEs). According to Poudyal, the bank plans to reach out to more customers by increasing their access to retail banking. “We have also entered the international arena as we have opened a representative office in Malaysia that can facilitate the remittance inflow to Nepal,” says Poudyal. The bank also sees a lot of opportunities in the hydropower sector and plans to invest in such projects in the future. 
Targeted Customer 
NMB Bank targets customers of all levels. Today, the bank provides its services to the general public, corporate houses, contractors and construction entrepreneurs. “We also have depositors from micro-finance companies,” Poudyal says, “We also provide our services to the mini market sector. We have also created an image for ourselves in the guarantee businesses.”
NMB Bank always supports people in times of natural disasters. After the devastating earthquake of April 25, the bank distributed relief materials to the victims. The bank provided tents protect heritage site destroyed by the earthquake. Also, the bank has allocated Rs 10 million to preserve cultural heritage and support earthquake victims. “Our joint venture partner from Malaysia contributed Rs 1.5 million to the PM’s Disaster Relief Fund through us,” shares CEO Poudyal. The bank has taken up preservation of the heritage sites as one of its main CSR activities. The bank organizes Heritage Painting Competition and Heritage Walkathon regularly.