Last week the bank offered bonus shares as a consolation to its shareholders because the RMA had disallowed the bank from declaring dividends last year
The Bhutan National Bank (BNBL) and the International Finance Corporation (IFC) have almost endorsed a deal to sell 20% stake of the bank to the member of the World Bank group at Nu 1.75 times more than the book value of the shares.
The book value of the shares of the BNBL is estimated at Nu 580 a share.
At the rate a share of the bank will cost the IFC Nu 1000 which works out to about Nu 1.3bn for the 20% stake.
The CEO of BNBL KipchuTshering confirmed that IFC will buy the shares of the bank.
He said the IFC is ‘very keen on purchasing the shares.’
The IFC Country Manager, Om Bhandari said the issue is being discussed.
KipchuTshering said the presence of IFC will add value to the shares of the bank.
He said the additional fund that will be garnered help improve the bank’s liquidity crunch situation.
BNBL is currently facing liquidity crunch leading has led to freezing of all types of loans. The bank in the first six months of this year has generated a net profit of Nu 212mn from loans and advances which is also attributed for the bank’s liquidity position.
The bank recorded a profit before tax of Nu 303mn.
However, KipchuTshering said the bank will meet its obligation to the Royal Monetary Authority (RMA) and its clients. He added the current restrictions imposed on vehicle and housing loans will not affect the profitability of the bank.
BNBL has also issued a bonus shares each for every share held with the bank.
Business Bhutan learnt the bonus shares were declared as a consolation for the share holders of the bank because the RMA had disallowed the bank from declaring dividends last year.
The bonus shares were also issued because the rights issue the bank made in December last was under-subscribed.
The bank had announced a rights issue of 3.55mn shares at a premium of Nu 450 a share out of which only 3.20mn shares were subscribed when the offer closed.
With the issue of shares BNBL will have the highest paid up capital and market capitalization at the stock exchange.
A study conducted by a group of bankers and economists in 2010 recognized BNBL as the most efficient financial institution in the country with respect to return on capital. The return on capital was about 21.7% compared to 16.3% of the Bank of Bhutan.
The study which was focused on the performance of the Bhutanese financial institutions described BNBL as the much more leveraged, and Bank of Bhutan as secure and stable.