KATHMANDU, 28 OCT 2014Â Â – Just over a week after taking over the management of NB Insurance as its largest shareholder, Nepal Bangladesh Bank (NB Bank) has taken steps to offload its shares in the crisis-ridden non-life insurer.
The bank on Monday issued an auction notice to sell its 642,500 units of the promoterâ€™s shares in NB Insurance.
The insurance company landed in crisis as a result of large scale funds embezzlement by immediate directors associated with the NB Group, the key promoter of both NB Bank and NB Insurance. The group is infamous for loan defaults and large scale embezzlements wherever they are involved.
NB Bank Chief Operation Officer Rameshwor Sharma Aryal said they moved to exit from NB Insurance as the central bank directive bars banks from holding more than 10 percent share in any other company. â€œEarlier, we had planned to completely acquire the insurer by injecting more capital,â€ he said.
NB Insurance paid-up capital currently stands at Rs 140 million, and the Insurance Board asked the company to mandatorily raise the capital to Rs 250 million.
NB Bank currently holds 45 percent share in the insurance company, NB Group 28 percent, NCC Bank 10 percent and the rest is held by the public, according to Aryal.
Another NB Group-promoted bank, Nepal Credit and Commerce (NCC) Bank, also plans to offload its stake in the insurance company.
Shiva Nath Pandey, coordinator of NCC Bankâ€™s management committee under the Nepal Rastra Bank, said they planned to sell the stock as soon as possible. â€œWe plan to hold a board meeting soon to take a decision,â€ he said.
NCC Bankâ€™s previous attempts to sell the shares in NB Insurance failed for the lack of buyers.
Crisis at NB Insurance started in February 2012, when the Insurance Board (IB) found it had made a controversial payment of Rs 59 million in the pretext of clearing house rent without taking the regulatorâ€™s consent. In November last year, the IB asked the Nepal Rastra Bank to freeze all bank accounts of NB Insurance for failing to abide by its directive.
The company has also been charged with investing rampantly without maintaining necessary liquidity as per the rules. The insurer has not submitted its financial reports to the regulator for a long time. In December 2013, IB halted the entire transactions of NB Insurance for failing to implement the regulatorâ€™s directive, besides being in poor financial condition.