Nepal Investment Bank Limited (NIBL) and is set to acquire Ace Development Bank. The two financial institutions signed a memorandum of understanding (MoU) to this effect on Friday.

With Nepal Rastra Bank (NRB) directing commercial banks to increase their paid-up capital to Rs8 billion through the balance sheet of the current fiscal year, they have been exploring merger and acquisition as well as issuing right’s shares and further public offerings (FPO) to meet the capital requirement.

NIBL, which recently conducted an FPO, aims to raise its capital to the required level through this acquisition. Ace Development Bank has a paid-up capital of Rs1 billion.

After the acquisition completes, NIBL and Ace will provide consolidated service under the name of Nepal Investment Bank Ltd, according to the bank’s statement. The two sides aim to complete the acquisition process by January 2017. NIBL and Ace have agreed to maintain a share swap ratio at 1:042, according to a senior NIBL official.

As per fourth-quarter results for 2015-16, NIBL has a deposit base of Rs108.63 billion and lending of Rs87.01 billion. It earned a net profit of Rs2.55 billion, while total assets amount to Rs131.33 billion. NIBL has a customer base of more than 700,000 being served through its 46 branches and 43 branchless banking locations nationwide, the bank said.

As per Ace’s third-quarter report, its deposits stand at Rs7.4 billion and lending at Rs6.53 billion. It earned a net profit of Rs143 million as mid-April last fiscal year.