Pubali Bank has received the go-ahead from the securities regulator to raise Tk 500 crore bond to strengthen its capital base in line with regulatory requirements.
The approval came in a commission meeting on Tuesday, said the Bangladesh Securities and Exchange Commission (BSEC) in a statement.
The bank will spend the proceeds to strengthen its additional tier-1 capital base which fulfills the BASEL-III complaint, it said. The characteristic of the bond is transferable, unsecured, non-cumulative, and contingent-convertible perpetual
Of the total figure, Tk 450 crore will be raised through private placement and the reaming Tk 50 crore through an initial public offering in compliance with the commission’s public offer rules. Per unit price of the bond is Tk 5,000.
A six per cent base rate for the bond will enable investors to gain a ceiling 10 per cent secured annual return.
Financial institutions, insurance companies, corporate bodies, asset management companies, mutual funds, and high net-worth individuals through private placements can purchase the bond.
Basel III is a 2009 international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector, by requiring banks to maintain proper leverage ratios and keep certain levels of reserve capital on hand, which is named Capital Adequacy Ratio (CAR).
For Bangladesh, under the Basel-III a bank should maintain the CAR 12.50 per cent, where 10 per cent core capital and 2.5 per cent buffer capital.
Under the Tier-1 capital a bank should maintain 6 per cent capital adequacy and Tier-2 it should maintain 4 per cent. This 10 per cent is mandatory of all banks.