FMO to invest 2.38 billion in NMB Bank

Kathmandu, Nov. 23: NMB Bank Limited and FMO, a Dutch development bank, Wednesday signed a joint venture agreement for the largest foreign direct investment (FDI) in Nepal's banking sector.

The FMO will invest Rs. 2.38 billion in the bank, including the premium of the shares.

It has increased its equity investment in the company from 3 per cent to 20 per cent.

The Dutch multinational had invested in the equity of erstwhile Clean Energy Development Bank (CEDBL) which was merged with NMB via share swap along with other two smaller banks, Bhrikutee Developmetn Bank and Pathibhara Bikas Bank, and Prudential Finance Company.

The FMO had 14 per cent stake in the CEDBL which was diluted to 3 per cent after the merger.

"The merger was strongly driven and supported for more than four years by the FMO through intensive and persuasive guidance by its nominee board directors and shareholders' representatives with the intension to create a bigger platform for strengthening the financial support for the renewable energy sector in Nepal," read a joint press statement by both the companies.

Deputy governor of the Nepal Rastra Bank Chinta Mani Siwakoti said that the joint venture with the experienced international financial institution would contribute to strengthening of the entire banking industry in Nepal.

"This will set a milestone at this crucial juncture and increase the volume of FDI in the country. Increased investment by FMO in NMB not only strengthens its capital base but also will help build its institutional human capabilities with competencies," he said.

According to him, FDI plays vital role in the country's economic development which increases the capital along with the competition, technology transfer, experience-sharing and enhancing the capacity for doing business.

Chief investment officer of FMO Linda Broekhuizen said, "FMO is proud to be a pioneer FDI investor to actively support the financial sector in Nepal, thereby enabling much needed investments in the renewable energy sector decreasing carbon dioxide emissions, while helping this beautiful country grows its economy."

Chairman of the Security Board of Nepal Dr. Rewat Bahadur Karki said that the joint venture will help attract more FDI in Nepal.

Chief executive officer of NMB Bank, Upendra Poudel, said that the agreement met the NMB objectives of investing in renewable energy agri-business and other priority sectors.

"FMO will assist NMB to become market leader in managing environmental and social risks and will continue to strengthen NMB's corporate governance through a substantial technical assistance," he said.

FMO (the Netherlands Developmetn Finance Company) is one of the largest bilateral private sector development banks in the world with an investment portfolio of 9.2 billion Euros.

Its investment is largely focused on financial institutions, energy and agri-business.