Kathmandu: Pakistan’s Habib Bank has accepted National Life Insurance’s proposal to purchase its stake in Himalayan Bank, paving the way for a major share transfer in the Nepali banking sector.
Habib Bank’s board has approved the offer made by National Life and agreed to move forward with the share sale process. Following the board’s approval, Himalayan Bank has submitted the proposal to Nepal Rastra Bank (NRB) for regulatory approval, according to a bank source who spoke to Clickmandu.
Habib Bank, which holds a 12.93 percent stake (equivalent to 28 million shares) in Himalayan Bank, had earlier submitted a request to sell its holdings. In response, Himalayan Bank had issued a 35-day public notice to existing shareholders offering the shares at a base price of Rs 112.80 per share. National Life Insurance then submitted a bid offering Rs 118.80 per share for the entire block of shares.
Now that Habib has formally accepted the higher bid from National Life, the transaction awaits regulatory approval from NRB. Under Nepali law, any significant transfer of shares, particularly involving major shareholders, requires central bank approval, along with a mandatory “fit and proper” test for the buyer.
Habib Bank had previously attempted to exit its investment in Himalayan Bank prior to the COVID-19 pandemic by selling its stake to the Commonwealth Development Corporation (CDC), which also holds shares in Habib. However, internal disputes among Himalayan Bank’s founding shareholders prevented the deal from going through.
Two years ago, Habib made another attempt to sell its stake, this time through an agreement with Himalayan Re-insurance. But NRB halted the transaction, citing procedural irregularities and the fact that the share transfer had not been initiated directly through Himalayan Bank, as required by the Banking and Financial Institutions Act (BAFIA) and unified directives.
Additionally, because less than two years had passed since the bank’s merger, NRB had raised concerns over capital gains tax implications and incomplete regulatory procedures, leading to a rejection of the deal at that time.
Although Himalayan Re-insurance had expressed interest in acquiring the shares again, it was disqualified from bidding this time as it is not a current promoter shareholder of Himalayan Bank. National Life Insurance, on the other hand, already holds a small stake in the bank and was thus eligible to submit a proposal.
The share transfer, once approved, will mark the end of Habib Bank’s long-standing involvement in one of Nepal’s major commercial banks and increase National Life’s footprint in the domestic banking sector.
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