Ater reporting an unaudited profit for the year ended mid-July 2004, public sector banking monolith Rastriya Banijya Bank (RBB) is now hiring a horde of fresh MBAs, launching new banking service products and considering compulsory retirement for 400 of the existing staff.

Last year, the bank reduced 1,267 staff under a voluntary Retirement Scheme (VRS) and was planning to retire 626 more this year under VRS-II. But there were only 208 applications received. Though these applications are already approved, the bank still has some 400 redundancies. But the bank’s senior executives say there will be no more VRS, hinting at the possibility of compulsory retirement scheme for these excess people.

Trying to fast remove its adage of the “Token Bank”  

According to Bruce Henderson, the American banking professional functioning as the CEO of RBB for the last two years under an effort to turn around the ailing bank, his team is also in the process of launching new consumer lending products to stem the flow of RBB clients to the private sector banks which are offering such loans. RBB will start with three products – vehicle loan, education loan and housing loan – making them available initially from Bishal Bazar and Thapathali branches in Kathmandu. “The services will start before Christmas and shall be expanded gradually after an experience of a couple of months,” he added.

Henderson also informed that all the other plans so far under the RBB revival scheme have been completed as scheduled except the computerization which was held up due to some bureaucratic delays in the procurement process. “However, some of the equipment needed for the implementation of Integrated Bank Information System (IBIS) have already arrived while others are on the way. Our 47 branches will be computerized soon,” he said without giving specific dates.

Meanwhile, the bank is in the process of starting to interview over 6,700 fresh MBAs to select 64 of them to fill new openings, according to Janardan Acharya, the HR Manager of the bank who is going to be named the Chief Operating Officer (COO) soon to coordinate the branches. According to him, the new MBAs will be put to a training course under which they will be in the training hall for half of the day while working for the other half at the head office and major branches in Kathmandu so that they will be producing outputs from the very beginning.

Ashish Garg, a Chartered Accountant in the management team said, the bank has introduced single-window system in cheques payments in computerized branches so that the customers need not wait long hours with tokens in their hands after handing over the cheques. Similarly, five big branches in Kathmandu are open now also on Sundays while 365 days banking is being planned for Singha Durbar and Thapathali branches. Trainings are also being provided to the deputy branch managers to prepare them to take over the position when the existing branch managers retire.  

Henderson adds, his team is trying to develop professionals from within the bank and the country to take up the key positions in a preparation to eventually privatize the bank.

Shikhar Insurance Starts Operation

Sikhar Insurance Co. Ltd. has started its operation as the newest entrant in the general insurance business of the country.

Promoted by some young entrepreneurs involved in banking, insurance, trading, manufacturing aviation and tourism, the new company has Rs. 125 million as the paid up capital.

The major promoters of the company are Amir Pratap Rana (Director of Kumari Bank), Ang Tsering Sherpa (MD of Yeti Airlines), Bikas JB Rana (Executive Chairman of Fishtail Air), Buddha Air, Gaurav Agrawal (of Maliram Shiv Kumar Group), Lomus Investment (associated with Lomus Pharmaceuticals), Rajendra Prasad Shrestha (a carpet entrepreneur) and Kailash Sirohiya and Binod Raj Gyawali (both associated with Kantipur Publications).

Deep Pandey, former CEO of Everest Insurance, is the CEO of the new insurance company.

Beer Industry in Restructuring Mode

Recent acquisition of San Miguel brand by Gorkha Brewery (P) Ltd. seems to have triggered a new spate of activities in Nepali beer market.

Kingfisher beer, a brand of India’s liquor giant UB Group, has been reintroduced in Nepali market after the absence of one year.

Supreme Marketing Nepal (P) Ltd., a unit of Vishal Group, has now acquired the sole distributorship for the brand. The product is priced equal to Gorkha Brewery’s Tuborg or San Miguel - Rs. 82. Earlier Kingfisher was being marketed by Rato Machhindra Traders in some selected markets.

The management of the United Breweries (Nepal) Pvt. Ltd., the UB Group subsidiary that produces Kingfisher in Nepal, has been in the hands of United Overseas (P) Ltd. for some time now and Star Beer, the other brand from the company that has some niche markets due to being  the first Nepali beer brand thus having some emotional appeal among some consumers, is still being marketed by United Overseas itself.

Meanwhile, Mount Everest Brewery (P) Ltd. that earlier produced San Miguel has got a new management led by Himal Kasaju, supported by some big names in trade. The new team is also learnt trying for technical tie up with some foreign beer companies.

Earlier, Varun Beverages (P) Ltd., the bottler of Pepsi range of beverages, was learnt to be making approaches for taking over the management of Mount Everest Brewery.

BizMantra Launched

Nepal version of “SME Toolkit” initiated by International Finance Corporation (IFC), an arm of the World Bank Group, has been launched in Nepal to help the small and medium enterprises to better manage their businesses, sustain the business growth, improve profits and focus on the future.

Called BizMantra in Nepal, the toolkit is available also on a internet portal www.bizmantra.org   

Supported and funded by Dhaka-based South Asia Enterprise Development Facility (SEDF), BizMantra is being managed by Elite Networks and is targeted towards businessmen who are looking for help to be better managed and entrepreneurs who are looking for information to start and improve a business. It provides free of cost some interactive tools and other resources to help the enterprise managers in the fields of accounting and finance, business planning, human resource, legal, insurance and tax, marketing and sales, operation and technology.

Various promotional and educational workshops are planned to create awareness about BizMantra, according to the sources concerned.

Two Devt. Banks Set Up

Nepal Rastra Bank has licensed two new development banks and both started operation in December under Bank and Financial Institutions Ordinance (BAFIO)

Sanima Bikash Bittiya Sanstha Limited (Sanima), started operation on December 6, and Gurkha Development Bank (Nepal) Ltd. (Gurkha) on December 5. Sanima is promoted by some non-resident Nepalis (NRNs) and Gurkha by some ex-servicemen of the British Army. Both fall under B category as per the BAFIO, and are equivalent to the development banks of today.

Ojha

With Rs. 163.2 million as paid up capital, both are larger in terms of capital than the existing national level development banks. Consequently their working area too is expected to be wider than that of existing development banks.

Both banks are to issue 30% of their capital to the general public and have set aside 19% for foreign banks and other institutional shareholders to be inducted later.

Record Single Import L/C

Himalayan Bank has established the largest import Letter of Credit known in recent times in Nepal. Opened at the request of Nepal Telecom in favour of ZTE company of China, the deal concerns import of CDMA System for operating efficient telephone services in Nepal and is of the value of about US Dollar 18.0 million (Nepali Rupees 1.3 billion).

Several large private sector banks in Nepal had bid for this L/C for the prestige it carries.

Corporate Scorecard

Nepali commercial banks have brought out their quarterly performance report for the first quarter of the fiscal year 2004-05. It shows all banks in profit in the quarter except Rastriya Banijya Bank.

Nabil Bank, has scored highest operating profit for the first quarter among the banks and that comes to be Rs. 213 million, Standard Chartered Bank follows it scoring Rs. 205 million operating profit.

All the banks except Himalayan Bank Ltd. (HBL) and Lumbini Bank Ltd. (LBL), increased their performance in the quarter as compared to the same period in the previous fiscal year 2003-04. Increase in loan loss provision and increase in total expenditure caused decline in the profitability of the HBL and the same explains the case of LBL. Total operating profit of LBL has decreased by huge percentage of 49.20. Its total expenditure increased by 28.88% as compared to the same quarter previous year and increase in net income by a mere 5.64% over the same period in the previous year.

 Everest Bank Ltd. (EBL) and Yeti Finance Company Ltd. concluded their 10th AGM. EBL earned a net profit of Rs. 143.6 million for the fiscal year 2003-04 and this comes to be 52.44% more as compared to the same period in the previous fiscal year 2002-03. The bank's financial performance in the last five years shows a continuous increase in its net profit. As a result, the bank is distributing 20% cash dividend to its shareholders for the fiscal year 2003-04, at the same level as in the previous years.

Similarly, Yeti Finance Company Ltd. earned a net profit of Rs. 5.1 million for the fiscal year 2003-04. The company in the previous year had earned a net profit Rs. 2.1 million.

Decrease in loan loss provision to zero level and increase in other income almost by double dragged the profit up by such a huge percentage (140%).

United Insurance Co. (Nepal) Ltd. is going to hold its 11th AGM on December 17, 2004. The company in the fiscal year 2003-04 substantially increased its performance as compared to the previous fiscal year 2002-03. In fiscal year 2003-04, it increased its premium collection, investment, total income, net profit after tax and book value per share by 19.44, 33.47, 14.4, 107.06 and 8.56 percent respectively.

Similarly, in the first quarter of the current fiscal year 2004-05, the company has increased its gross premium by 24% as compared to the same period in the previous fiscal year.