December 5: Pakistan’s Habib Bank, the foreign partner of Himalayan Bank, is preparing to sell its shares in the bank to Himalayan Reinsurance Company.

Sources informed that Habib and Himalayan Reinsurance have reached an agreement for the purchase and sale of shares at Rs 130 per share and a correspondence has been sent to Nepal Rastra Bank for approval.

Before the merger of Himalayan Bank with Civil Bank, Habib owned 20 percent shares in Himalayan Bank. When shares were adjusted after the merger, Habib's ownership fell to 12 percent. Accordingly, Habib Bank is going to sell 28,12,447 shares. However, neither the two banks nor the reinsurance company and Nepal Rastra Bank have formally informed about this deal.

According to the provisions of the Banks and Financial Institutions Act (BAFIA), promoter shares cannot be sold for five years of operation of banks and financial institutions.

Similarly, the approval of the central bank is required for the sale of shares of companies and organizations with more than 2 percent share ownership. According to the provisions of the Act, the purchase and sale process will proceed only after the central bank approves the agreement between Habib and Himalayan Reinsurance.

Habib Bank had tried to sell shares of Himalayan Bank four years ago. Although Habib made an agreement with the British Commonwealth Development Corporation (CDC), it was broken after the opposition from Himalayan Bank's management.

Now the reinsurance company is going to buy the shares. The chairman of the company is Shekhar Golcha of Golcha Group. He is also the former president of the Federation of Nepalese Chamber of Commerce and Industries.