UCB to open exchange outlet in Singapore

United Commercial Bank (UCB) will set up a subsidiary company in Singapore subject to the approval of the relevant agencies.

“The board of directors has decided to form the subsidiary company having paid-up capital of $0.9 million subject to the approval of the regulatory authorities,” said the bank in a filing with the Dhaka Stock Exchange.

The UCB’s announcement comes after City Bank also announced two months ago to set up a subsidiary company in Singapore investing Tk 12.6 crore.

This is subject to approval from the Bangladesh Bank and the Monetary Authority of Singapore. The primary focus of the new subsidiary will be on Bangladesh-bound remittances, according to City Bank. As remittance inflows increase, banks are leaning towards setting up exchange houses abroad as one of the sources of income.

Singapore is the 10th largest source of remittances in Bangladesh. According to the Bangladesh Bank, the country received $200 million in remittances from Singapore in the second half of 2021.

According to the Bureau of Manpower, Employment and Training data, Bangladesh exported 27,875 workforces last year and from 1972 to January 2022, more than 8 lakh workforces were sent to Singapore, which is 6 percent of country’s total manpower exports. 

Meanwhile, UCB has decided to raise Tk 500 crore through its second perpetual bond to strengthen its capital base.

“The board of directors has decided to issue of unsecured, contingent-convertible, non-cumulative, ‘UCB 2nd Perpetual Bond’ of the amount up to Tk 500 crore to be included in the Additional Tier-I Capital subject to the approval of regulatory authorities,” said the company in a filing with the DSE on the day.

Tier 1 capital is a bank’s core capital and includes disclosed reserves—that appear on the bank’s financial statements—and equity capital. This money is the funds a bank uses to function on a regular basis and forms the basis of a financial institution’s strength.

Investors will receive 8-10% interest against the bond, and the face value of the bond units is Tk10 lakh each. Institutional and other qualified investors will be offered the bond units in the private placement.