Banks to go public

March 17 – There will be several opportunities to invest in shares of financial institutions this year, with royal monetary authority (RMA) regulations requiring all commercial banks, old and new, to be public limited companies.

The two new banks, Druk PNB and T Bank, and the Bank of Bhutan will have to float at least 30 percent of their paid up capital to the public, according to the ‘Regulations for the establishment of commercial banks’ which came into effect on January 5 last year. The Bhutan National Bank made its float way back in 1998.

Druk PNB, the country’s first joint venture bank with a foreign partner, announced that it would raise Nu 90 mn, 30 percent of its paid up capital, from the public by mid February when it opened its Thimphu head office on January 27.

“People have been calling from all over the country regarding our initial public offer (IPO),” said a Druk PNB official. “There’s widespread interest to invest with us.”

On the street there is a general perception that it might be worth risking some money on Druk PNB shares. “The banking sector is bound to grow,” said Chimi, who works with a government-owned corporate agency. “With a established foreign partner, Druk PNB shares might be worth it, but they never seem to be floating.”

The registrar of companies, Karma Yeshey, said that they are yet to receive the Druk PNB prospectus that needs to be examined by a government committee before the float can go public. “The committee will generally check to see what kind of prospects the company is offering to the public and whether they can be achieved, the accuracy of information, financial plans and investment models,” explained Karma Yeshey. “How long the examination takes will depend on the information provided and if more is required.”

The Nu 220 mn T Bank, which opened for business on March 13, plans to raise 40 percent of its paid up capital (Nu 88 mn) from the public. Although no dates have been given, RMA’s Eden Dema, who is in charge of supervising financial institutions, said, “They’re required to making the public offering soon after they begin commercial operations.” T Bank CEO Tshering Dorji said that, at the moment, they had not yet decided on a date to make the public offering.

Meanwhile, investors are also weighing the prospects of buying shares of the Bank of Bhutan, the country’s oldest and largest bank, which is a subsidiary of the Druk Holdings and Investments, the government’s investment arm. Eighty percent of the bank is held by DHI and 20 percent by the State Bank of India. Today it has a reserve surplus of more than Nu 2 bn, according to its CEO, Kinga Tshering.

“If it’s a government regulation that banks have to divest 30 percent to the public, then we’ll have to comply,” said the CEO. “But the shareholders, DHI and SBI, will have to approve of the divestment.”

Given that BoB has been in the business for more than four decades, CEO Kinga Tshering said that BoB shares would probably come at a premium, based on future projections of the bank’s growth. “But I’m not in a position to give a date as to when the divestment might happen,” he added. “That will be decided by the shareholders.”

source: kuensel