KATHMANDU – A total of 25 foreign banks are interested to become strategic partner of Agricultural Development Bank. These banks from China and other countries have demanded 51 percent share ownership but the government has taken a decision to sell only 31 percent of its stake of 51 percent in the bank.

Chief Executive Officer of the bank Tej Bahadur Budathoki revealed that the 25 banks, that are in contact of the consultant appointed by the Finance Ministry and the Asian Development Bank (ADB), have expressed interest to become strategic partner. The government is preparing to rope in a stragegic partner for the bank, and preparation of the due diligence audit (DDA) of the bank is in the final stage. “We will complete special audit within mid-July. Decision about how and in what capacity the partner should be brought will be taken after that,” he added. The bank stated that it is working to bring in a strategic partner by the end of 2014. Legal advisor has been appointed in consultation with the Finance Ministry and ADB, and an Australian company is doing audit as per their advice. Budathoki said global tender for strategic partner will be invited after the DDA report is received.

The bank has already determined pre-requisite conditions for selection of strategic partner. Paid-up capital of the partner bank has to be Rs 50 billion, it should have 2,000 branch offices, invested 30 percent of its total loan mobilization on agriculture, and it must be internationally reputed. A foreign company looks likely to be selected as partner as these standards cannot be met by Nepali banks. The bank claims that its capital and technology will improve, managerial capacity will be enhanced, and modern banking services and international relationship will also be better after bringin a strategic partner. The government had taken the decision to bring a strategic partner by selling it shares as per the Financial Sector Reform Program of ADB.

The government has 51 percent stake in the bank and commoners 49. “The bank will become more competitive after bringing strategic partner by reducing the government stake. We can also increae investment,” Budathoki reasoned. The bank has the highest capital among Nepali commercial banks with authorized capital of Rs 13 billion and paid-up capital of Rs 9.63 billion. The bank established in 1968 has collected desposit of Rs 65 billion and is delvering service through 345 branch offices.

A Nepali team had reached Chine a few months ago after China Construction Bank (CCB) expressed interest to become staregic partner. The team had also given reasons for the need of a partner.