Siddhartha Bank Receives Approval to Issue Preference Shares Worth NPR 3.5 Billion Enhancing Banking Investment Opportunities in Nepal
5th January 2026, Kathmandu
Siddhartha Bank Limited has achieved a major regulatory milestone by securing official approval from the Securities Board of Nepal to issue preference shares. This strategic move allows the bank to raise 3.5 billion rupees in capital further strengthening its financial position in a competitive market.
Siddhartha Bank Preference Shares
By joining an elite group of financial institutions authorized for such issuances Siddhartha Bank is offering a unique investment instrument to the public. This development is not only a boost for the bank’s internal capital management but also a significant addition to the diverse investment opportunities currently available in the Nepalese capital market. The issuance highlights the bank’s proactive approach to capital augmentation and its commitment to providing stable returns to its investors.
SIDDHARTHA BANK ENTERS THE ELITE PREFERENCE SHARE MARKET
With the green light from the regulator Siddhartha Bank has become the fourth banking institution in Nepal to be authorized for the issuance of preference shares. It follows in the footsteps of Nabil Bank NMB Bank and Kamana Sewa Bikas Bank. The total approved amount of 3.5 billion rupees will be divided into 3.5 million units with each share carrying a face value of 100 rupees. This specific type of share is particularly attractive to institutional investors and conservative retail investors who prioritize steady income over the high volatility often associated with common equity. The entry of Siddhartha Bank into this space signals a maturing market where banks are exploring innovative ways to manage their balance sheets.
KEY FEATURES AND DIVIDEND STRUCTURE
The preference shares issued by Siddhartha Bank come with a set of specific features designed to appeal to income seeking investors. The most prominent feature is the fixed dividend rate of 8.25 percent. This dividend is payable during years when the bank records a profit providing a relatively high degree of predictability compared to ordinary dividends which can fluctuate significantly based on annual earnings. To ensure a smooth and professional distribution of these shares the bank has appointed NMB Capital as the official issue and sales manager. This partnership guarantees that the application and allotment process will adhere to the highest standards of transparency and regulatory compliance.
STRENGTHENING CAPITAL ADEQUACY WITHOUT EQUITY DILUTION
One of the primary reasons Siddhartha Bank has opted for preference shares is to strengthen its Tier 1 and Tier 2 capital base as required by Nepal Rastra Bank directives. Unlike issuing new ordinary shares preference shares allow the bank to raise capital without diluting the voting rights or the ownership percentage of existing common shareholders. This is a crucial strategic advantage as it enables the bank to expand its lending activities and maintain a healthy capital adequacy ratio while keeping its current corporate structure intact. For the bank this represents a cost effective way to secure long term funding that supports future growth and risk management initiatives.
Advertisement
SIGNIFICANCE FOR THE NEPALESE INVESTMENT LANDSCAPE
The introduction of 3.5 billion rupees worth of preference shares into the market is a positive sign for the Nepalese investment landscape. For many years the secondary market was dominated by common stocks and debentures. The addition of preference shares provides a middle ground offering higher seniority in dividend payments than common shares but with different risk profiles than debt instruments. This diversification is essential for building a resilient capital market that can cater to different types of investors from pension funds and insurance companies to individual retirees looking for a reliable monthly or annual payout.
COMPARISON WITH OTHER LEADING BANK ISSUANCES
Siddhartha Bank’s 3.5 billion rupee issuance is competitively sized compared to its peers. Nabil Bank remains the leader with a 5 billion rupee issuance followed by Siddhartha and then NMB Bank with 3 billion rupees. Kamana Sewa Bikas Bank on the other hand has issued a smaller amount of 350 million rupees targeting a different segment of the market. By benchmarking its offering against these established institutions Siddhartha Bank is positioning itself as a major player in the high tier financial services sector. The success of these previous issuances indicates a healthy demand for such products suggesting that Siddhartha Bank’s offering will likely see strong participation from the public.
LONG TERM IMPACT ON BANKING STABILITY AND GROWTH
The long term impact of this capital raise on Siddhartha Bank is expected to be overwhelmingly positive. With an additional 3.5 billion rupees in its coffers the bank will have the necessary liquidity to invest in modern banking technologies expand its branch network into underserved provinces and increase its exposure to high growth sectors like energy and infrastructure. This capital infusion acts as a buffer against economic shocks and ensures that the bank can continue to serve its depositors and borrowers with confidence. As the bank grows its ability to generate profits will increase which in turn secures the 8.25 percent dividend payments for the preference shareholders.
CONCLUSION AND NEXT STEPS FOR INVESTORS
In conclusion the approval for Siddhartha Bank to issue 3.5 billion rupees in preference shares is a win win for the institution and the investing public. It provides the bank with the capital needed for expansion while offering investors a stable 8.25 percent dividend opportunity. As NMB Capital prepares for the formal launch of the unit sales interested investors should monitor the bank’s official announcements for the specific dates of the public offering. This issuance marks a new chapter in the bank’s 20 year journey of excellence in the Nepalese financial sector.
For More: Siddhartha Bank Preference Shares
