MIN RATNA BAJRACHARYA
Some see a crisis as a time to opt out, others see it as an opportunity.
Nepal's banking sector has been the most-professionally run where government regulators have taken the least obstructive role. Despite the pall of gloom caused by the after-effects of the international financial crisis and domestic uncertainties about the Maoist-led government's commitment to the private sector, Nepal's financial sector has proved to be remarkably resilient.
One of the newest Nepali banks and one to register the fastest diversification and growth is the Ace Development Bank, which in the first year after upgrading from a finance company has become the highest earner per share among development banks in Nepal. It's net profit grew 150 per cent in the first year.
Ace has shown aggressive growth in merchant banking and has become the largest manager of issues brought into the market with 23 IPOs worth Rs 2.7 billion. The bank has also become the first to introduce the Exchange Traded Fund in Nepal in the form of Gold ETFs and will soon be introducing Visa Electron debit cards. It is focussing on infrastructure financing and rural micro financing.
The architect of all this is CEO Sidhhant Pandey, who himself returned to Nepal from an international banking job with Merrill Lynch in London in 2004.
"In hindsight, I'm glad I came back to Nepal when the choice was mine, now I may have been forced to come back," Pandey joked, citing the layoffs in investment banks internationally due to the global financial crisis.
Pandey wanted to return to Nepal to head and run a financial institution, and says he has felt "enormous satisfaction" with the results he has helped achieved at Ace. He attributes the bank's success to teamwork and his own deep involvement in every aspect of its activities on a rotational basis.
Yet, Pandey has no illusions about the challenges ahead. He told Nepali Times after being selected the paper's Company of the Month for February 2009: "We, as a country, have to brace ourselves for a downturn, we have to have the systems in place to face the effects of the global crisis. And as a bank we have to be strongly capitalised."
As the world goes through "de-globalistion" there is a tendency for nation states to address economic contraction with protectionism and insulate themselves. The immediate effect will be felt on remittances, which has kept the Nepali economy afloat.
Yet, Pandey feels the government's recent decisions on VDIS, inability to curb militant unionism and ensure security have not served to bolster confidence, investors are wary and there is capital flight. "The voluntary tax disclosure scheme is a wonderful instrument, but there is a time and place to do it, the timing has been all wrong," he says, counting out in his fingers a checklist of what the government's priority should be: power, security, labour and investment policies.
Ace itself has joined hands with Butwal Power Company in the 42 MW Marsyangdi III to undertake the entire financial requirements to build the scheme and has been involved with the Swiss-based le Rosey to invest in microfinance projects. Ace has been cited for its corporate governance, and Pandey says that is a result of his company's emphasis on accountability and responsibility.
"We want managers who take responsibility and not pass the buck," he says.The bank has opened three new branches this year, including one in Kirtipur. Why Kirtipur, we asked. "Because I was there by chance and didn't see any banks," Pandey replies matter-of-factly.
Ace has also helped revive the Burns Unit at Bir Hospital which was about to close down because of lack of funds, it is involved in cleaning up the Hanuman Dhoka area and works with Bal Mandir on scholarships for children.