Recently in Nepal

Recently, Himalayan saving and finance company(HISEF) was merged with Laxmi Bank providing one share of the bank to each share h0lding of HISEF shareholders. Himalayan Distillery and Jwalakhel Distillery operating under one management group had been already merged. Besides, Sri Lanka Merchant Bank is merging with Nepal Credit and Commercial Bank, etc. Similarly, many old public enterprises will be merging and acquired to form new company such as RNAC, Nepal Telecommunication Corporation, Nepal Electricity Authority etc.

In the last two decades, government following the economic liberalization policies has encouraged the growth of joint venture business in Nepal especially in initiating the growth of number of joint venture banks in Nepal. These include notable joint venture companies such as Nepal Arab Bank, Standard Chartered Bank, Nepal Everest Bank, Himalayan Bank, Nepal State Bank of India, etc. Even at the manufacturing sector, Nepal Lever Limited, Nepal Dabur Company, etc have developed. Presently, eleven listed commercial banks, four development Banks, forty-one finance companies, and thirteen Insurance Companies are operating in competitive financial market in Nepal. As Nepalese financial market is characterized by low volume of turnover, high interest rate in lending, high interest rate spread, inefficient management, lack of practice of project financing, problem of inadequate working fund and unhealthy competition between the companies in finance sector may compel the process of merger and acquisitions between the companies in operation in order to overcome these problem. Merger and acquisition becomes an urgent need, as Nepal had already become a member of WTO, especially in finance sector because foreign banks' branch will be supposed to allow operating in Nepalese market after 2010.