Kathmandu: Himalayan Reinsurance Company’s long-standing ambition to acquire a major stake in Himalayan Bank has officially come to an end, as National Life Insurance Company overtook the bid and secured the shares previously held by Pakistan’s Habib Bank.
Habib Bank, a founding shareholder in Himalayan Bank, had been attempting to divest its stake for years due to declining returns from the Nepali banking sector. However, lack of a favourable exit strategy had forced it to retain the shares longer than intended.
An initial opportunity to sell arose before the COVID-19 pandemic, when Germany’s Commonwealth Development Corporation Group expressed interest in acquiring Habib’s stake at Rs 280 per share. However, Nepal Rastra Bank (NRB) insisted on a formal procedure, and existing founder shareholders were given priority under regulations. With no founder shareholder stepping up at the offered price and former board chair Manoj Bahadur Shrestha reportedly obstructing the process, the deal collapsed in 2019.
Recently, Habib Bank once again sought to sell its stake—amounting to 12.93 percent or over 2.8 million shares of Himalayan Bank at Rs 112.80 per share. Himalayan Reinsurance (Himalayan Re) entered into a written agreement to buy, and both parties approached NRB seeking approval. However, NRB denied the request, stating the procedural requirements were not fulfilled—particularly the mandatory 35-day notice to existing founder shareholders.
NRB objected to the behind-the-scenes agreement and only gave its conditional approval at the end of Governor Maha Prasad Adhikari’s term after both sides committed to follow due process. Following the central bank’s directive, Himalayan Bank issued a 35-day public notice giving existing founder shareholders first right of purchase.
In a dramatic twist, National Life Insurance stepped in and submitted an offer to purchase all of Habib’s founder shares at Rs 118 per share, effectively closing the chapter on Himalayan Re’s aspirations. Himalayan Re, not being an existing founder shareholder, was ineligible to apply during the initial phase. Had the company held even a minimal number of founder shares—say 100 units—it would have qualified to bid. That oversight cost them dearly.
Sources say that Himalayan Re had been advised years ago to acquire a small number of founder shares precisely to avoid such a hurdle. However, one of its major shareholders had confidently claimed, “Who else has the financial capacity besides us?” That confidence, critics say, ultimately led to the missed opportunity.
National Life’s takeover was especially significant as many other institutional investors, including N Trading, Mutual Trading, Abha International, Chhaya International, Pradeep Jung Pandey, Sashikant Agrawal, and others showed no interest in acquiring Habib’s stake. Even the Employees Provident Fund, which had earlier skipped the 2019 bidding process, stayed out again.
National Life, whose major shareholders include Siddheshwar Kumar Singh, Rastriya Banijya Bank, Nepal Investment Mega Bank, and Rajiv Bikram Shah, now emerges with a stronger foothold in Himalayan Bank.
In contrast, Himalayan Re’s missed chance has triggered internal debates within the Himalayan business group, with murmurs of distrust. Some insiders point to Bhawani Rana, a member of the same business circle and board member of National Life, suggesting that possible internal dynamics may have influenced the deal.
During Himalayan Re’s annual general meeting, Chairperson Shekhar Golchha had informed shareholders about the plan to purchase Habib’s stake in order to diversify the company’s investments amid falling interest rates on fixed deposits. He had noted that the acquisition was under process and would strengthen the Himalayan brand in Nepal’s financial sector.
However, with the deal falling through, Himalayan Re’s strategic roadmap has hit a setback. The company, alongside its affiliated investors, had envisioned creating a Himalayan-branded financial empire—already backing ventures like Himalayan Life (formed after merging Prime, Gurans, and Union Life) and the anticipated Himalayan Stock Exchange.
Now, the failure to enter Himalayan Bank not only represents a missed investment opportunity but also casts a shadow over group cohesion, say market insiders. Questions are being raised about trust and unity within the Himalayan Group, and how the setback could impact the still-pending licensing of the Himalayan Stock Exchange.
Despite the loss, some Himalayan Re board members now argue that walking away from Himalayan Bank may have been a blessing in disguise. “The bank has been posting accumulated losses for the last three years and is currently under stress from capital adequacy issues and high non-performing loans,” one director said. “Maybe it’s better we didn’t succeed.”
Still, critics argue that if Himalayan Re had taken strategic advice years ago, the situation could have been different. One source commented, “We never imagined National Life would swoop in. A single oversight cost us years of preparation and strategy.”
Whether this missed opportunity becomes a momentary stumble or a lasting fracture within the Himalayan business group remains to be seen.
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