NMB Bank Limited in Nepal: A Comprehensive Guide

NMB Bank Limited is one of the leading banks in Nepal, with a rich history dating back to 1999. It was established by a group of entrepreneurs who wanted to create a bank that would cater to the needs of small and medium-sized enterprises.

NMB Bank Limited has its headquarters in Kathmandu, Nepal, and has a strong presence across the country with over 100 branches. The bank offers a wide range of financial services, including deposits, loans, and remittances.

The bank has a strong focus on digital banking, with a mobile banking app that allows customers to manage their accounts, pay bills, and transfer funds on the go. This has made banking more convenient and accessible to customers across the country.

NMB Bank was founded in May 2008 through a merger with four financial institutions.

It was created as a result of combining Bhrikuti Development Bank, Pathibhara Bikas Bank, Prudential Finance Company, and Clean Energy Development.

The bank has a strong license as an "A" class financial institution.

In September 2016, NMB Bank signed a joint venture agreement with the Netherlands Development Finance Company, FMO.

This partnership made FMO the single largest shareholder of the bank.

NMB Bank received recognition as 'Bank of the Year in Nepal' for two consecutive years, 2017 and 2018.

This prestigious award was given by The Banker, a service of the Financial Times, for its innovative use of digital technologies in Nepal's financial sector.

In September 2019, NMB Bank expanded its reach by acquiring Om Development Bank.

NMB Bank Limited has a paid-up capital of Nepalese Rupees 18.37 Billion as of FY 2023/24.

The bank's ownership structure is divided between the Promoter Group and the General Public, with the Promoter Group holding 51.00% and the General Public holding 49.00%.

Here's a breakdown of the shareholding in NMB Holdings Limited, the holding company of NMB Bank Limited:

The ownership structure of a company is often a complex and interesting topic. The Bank has a paid-up capital of Nepalese Rupees 18.37 Billion as of FY 2023/24.

Its ownership is divided between the promoter group and the general public. The promoter group holds a significant stake of 51.00%, while the general public owns 49.00% of the shares.

The bank's ownership structure can be broken down into its major shareholders. In the case of NMB Bank Limited, the holding company is NMBZ Holdings Limited, a Zimbabwean investment and holding company. As of December 2017, the shareholding in NMB Holdings Limited is as follows:

Note: Arise BV is a special purpose vehicle company, formed in 2016 and co-owned by Norfund, FMO, and Rabobank.

NMB's capital base will enable it to provide finance for larger medium-sized run of the river hydro projects and corporates.

The environmental and social related issues will be handled properly by a tailor-made ESMS, with technical assistance from FMO.

This approach will set an example for Nepal with regards to sustainable finance, positioning NMB as a leader in the field.

FMO has already organized a master class on sustainable finance and project finance for NMB's energy team, which included training on the IFC performance standards.

NMB Bank Limited has a significant investment from FMO, a Development Finance Institution (DFI). This investment was made possible through a merger with CEDB and three smaller banks in 2015.

FMO initially had a 14% stake in CEDB, which diluted to 3.19% after the merger. The bank recently increased its stake to 20% by taking over the existing 3.19% stake and investing an additional 16.81%.

The total transaction size for this investment is between USD 24.5 million and USD 29.5 million, depending on the future issuance of additional public shares.

FMO's investment in NMB is driven by a long-term partnership, which has been over 4 years in the making. FMO's nominee board directors and shareholders' representatives have provided intensive and persuasive guidance to support the merger.

The merger between NMB and CEDB was strongly driven by FMO, and the organization has been building its reputation, network, and relationship with the Nepalese Central Bank (NRB) since 2008. FMO invested in CEDB in 2008.

FMO aims to add value to NMB through a Technical Assistance (TA) program on strategy support, improved Corporate Governance (CG), and Environmental and Social (E&S) management. NMB recently became a member of the Global Alliance for Banking on Values.

The total transaction size for FMO's investment in NMB is between USD 24.5 million and USD 29.5 million, depending on the future issuance of additional public shares. FMO has underwritten the whole transaction so far.

When starting a business, it's essential to have a solid understanding of the funding options available.

Bootstrapping is a popular choice, where entrepreneurs use their own savings or revenue to fund their venture, as seen in the example of Steve Jobs, who used his own money to start Apple.

Angel investors provide critical funding for startups, typically in exchange for equity, and can be a great option for businesses that don't qualify for traditional bank loans.

Venture capital firms invest large sums of money in high-growth businesses, often in exchange for a significant equity stake, as seen in the example of Google's early funding rounds.

Crowdfunding platforms allow businesses to raise funds from a large number of people, often in exchange for rewards or equity, and can be a great way to validate product demand and build a community.

Government grants and loans can provide valuable funding for businesses that meet specific criteria, such as being a small business or operating in a specific industry.

NMB Bank Limited is committed to social responsibility, especially when it comes to environmental and social issues. They have developed a tailor-made Environmental and Social Management System (ESMS) with technical assistance from FMO.

This ESMS ensures that environmental and social related issues are handled properly, especially for larger hydro projects and corporate clients. FMO's support has been invaluable in this process.

NMB Bank Limited has also been actively promoting sustainable finance, with FMO organizing a master class on sustainable finance and project finance in September 2016 for their energy team. This training included instruction on the IFC performance standards.

NMB Bank was established in October 1992 by a group of Zimbabwean entrepreneurs who had previously held senior positions in reputable international financial institutions.

The liberalisation of the Zimbabwean economy and financial sector in the early 1990s sparked the creation of NMB Bank. The Bank was registered as an accepting house under the Banking Act in May 1993.

NMBZ Group's continued growth led to a public floatation, which was successfully listed on the Zimbabwe Stock Exchange in early 1997 and the London Stock Exchange simultaneously.

The public offer was 4.5 times oversubscribed in Zimbabwe and 2 times oversubscribed in London. The Bank was granted a commercial banking licence on 6 December 1999.

In June 2010, NMB Bank undertook a rights issue to raise US$10.3 million, which was fully underwritten by African Century Financial Services Investments LLP.

African Century acquired a 25% stake in the Bank, later reduced to 18.25%. This investment partnership is based in the United Kingdom.

NMB Bank invited three institutional investors, FMO, Norfund, and AfricInvest, to participate in a share placement in 2012, resulting in a collective additional capital of $14.8 million.

The three strategic foreign investors collectively own 27% of the Bank. This investment has contributed significantly to the Bank's growth.

In 2016, FMO, Norfund, and Rabobank consolidated their investments in financial institutions in Africa into an investment company called Arise.

Arise became the second-largest shareholder in NMB Bank at 17.11%. This strategic investment has further boosted the Bank's growth trajectory.

The Bank made a strategic shift in 2014 by broadening the market segments to embrace the mass market and a specific focus on SMEs, leveraging on technology.