Kathmandu: National Life Insurance Company Limited has signed an agreement with Pakistan’s Habib Bank Limited to purchase its shares in Himalayan Bank. The agreement was concluded on Thursday, August 15.
According to a company source, “Since the purchase amount did not exceed the regulatory threshold, approval from the National Insurance Authority was not mandatory. However, prior approval had already been obtained, which made the agreement process easier.”
National Life has agreed to acquire the shares at a rate of Rs 118.80 per unit. Earlier, Habib Bank had submitted a proposal to Himalayan Bank to sell its stake. Based on that request, the bank invited applications from its founder shareholders.
Among those who expressed interest were National Life, Prabhu Mahalaxmi Life Insurance, investor Ram Prasad Acharya, and another female investor. However, only National Life submitted its application in compliance with the published terms, making it the final buyer.
Habib had proposed to sell 28,012,447.45 shares in Himalayan Bank at a minimum rate of Rs. 112.80 per unit in bulk. Accordingly, the bank had issued a notice on June 13 calling on founder shareholders with the interest and capacity to purchase the entire stake.
As per the notice, applications had to be submitted within 35 days of publication. Ultimately, four founder shareholders applied, but National Life alone met the required conditions. Moreover, while the minimum offer price was Rs 112.80 per share, National Life submitted a bid of Rs 118.80, which Habib accepted, leading to the share purchase agreement.
Habib Bank holds a 12.93 percent stake in Himalayan Bank. The bank’s total paid-up capital stands at Rs 21.65 billion. Since National Life placed its bid above the minimum set price, it emerged as the successful applicant.
The biggest contender for the shares had been Himalayan Reinsurance Company, which had applied to Nepal Rastra Bank (NRB) a year and a half ago with an agreement to purchase the shares. Although Habib Bank and Himalayan Reinsurance had signed a deal in December 2023, and both Himalayan Bank and Himalayan Re’s boards had endorsed it, NRB withheld approval for three reasons: Lack of sufficient details required for a “fit and proper test” of the purchasing company, NRB’s policy preference to prioritize foreign investors for such share sales, and the risk of losing significant capital gains tax revenue, as two years had not yet passed since Himalayan Bank’s merger with Civil Bank.
Because of these reasons, the sale process was suspended at the time.
Now, more than two years have passed since the merger, resolving the tax concerns. Among the applicants, only National Life met all conditions, making it the eligible buyer. With this, Himalayan Reinsurance’s hopes of acquiring the stake have effectively ended.
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