October 6: Pakistan's Habib Bank has been experiencing difficulties in selling its 20 percent promoter shares in Himalayan Bank. The UK's Commonwealth Development Corporation Group (CDC), which has been interested in buying the shares for nearly a year and a half, has recently become reluctant to make the purchase due to COVID-19.

By the time of the bank's annual general meeting last year, 80 percent of the Due Diligence Audit (DDA) was completed, and the rest was to be done after the AGM. However, this did not happen immediately. CDC is now holding back from buying Habib's shares, citing COVID-19 as the reason.

Tulasi Prasad Gautam, the chairman of Himalayan Bank, says that the CDC has expressed its intention not to invest in the shares because of COVID-19. "We had a conversation with Habib's representative. CDC has expressed its intention not to buy the shares due to COVID-19. The purchase has been postponed for now,” said Gautam.

Until a month ago, CDC had said it would hold the share purchase agreement till 2020 because it was not possible to travel back and forth because of coronavirus. However, Gautam says that CDC doesn’t seem willing to invest on the shares anymore as the COVID-19 pandemic may not be ending anytime soon.

After the distribution of 10 percent bonus shares from the annual general meeting of the Fiscal Year 2075/76, the issued capital of Himalayan Bank has increased to Rs 9,372,281,428. Habib owns 20 percent of the total shares of the bank, which amounts to a total of 17,040,511 units of shares.

Habib had been trying to return after selling its investment in Nepal for a long time but has had to remain silent due to the lack of buyers. Habib has wanted to sell its promoter shares in Himalayan Bank because it didn’t meet its goals as it had expected.

Habib Bank also wanted to sell its shares in Himalayan Bank due to the lack of trade between Nepal and Pakistan as well as the lack of any Pakistani communities in Nepal.

Habib had first offered the other promoters of Himalayan Bank to purchase its shares. Habib had made this offer because the remaining promoters legally have the right to purchase the shares first. However, after the rejection from the remaining promoters, Habib intended to sell its shares to an international organization. After the CDC withdrew from the purchase of shares, Habib Bank had requested the Employees Provident Fund to buy the shares.

Chairman Gautam however says that it would not be possible for the fund to buy all of Habib’s shares as they already have 14 percent stake in the bank. As mentioned in the Employees' Provident Fund Act, the fund can invest only up to 25 percent in any bank and financial institution.

“Habib will have to sell its entire 20 percent stake when it’s making the sell. According to the policy, it is not possible for the fund to buy all of the shares,” he told New Business Age.

October 6: Pakistan's Habib Bank has been experiencing difficulties in selling its 20 percent promoter shares in Himalayan Bank. The UK's Commonwealth Development Corporation Group (CDC), which has been interested in buying the shares for nearly a year and a half, has recently become reluctant to make the purchase due to COVID-19.

Habib Bank also wanted to sell its shares in Himalayan Bank due to the lack of trade between Nepal and Pakistan as well as the lack of any Pakistani communities in Nepal.

“Habib will have to sell its entire 20 percent stake when it’s making the sell. According to the policy, it is not possible for the fund to buy all of the shares,” he told New Business Age.