Mercantile Bank to issue Tk 500cr perpetual bond

The Bangladesh Securities and Exchange Commission (BSEC) has approved the proposal of Mercantile Bank to collect a Tk 500 crore fund from the capital market through a perpetual bond.

The approval came at a commission meeting held on Tuesday. The bank will use the fund to strengthen its additional tier-1 capital base.

According to the commission statement, some Tk 450 crore will be raised through private placement and Tk 50 crore through an initial public offering in compliance with the commission’s public offer rules. Its unit price is Tk 5,000.

A six per cent base rate for the bond will enable investors to gain annual return secured by a 10 per cent ceiling.

Financial institutions, mutual funds, insurance companies, scheduled banks, regional rural banks, trust, organizations, corporations and high net-worth individuals can purchase the bond.

UCB investment Limited will act as the trustee of the bond while IDLC Investment Limited will act as the issue manager. Under the Basel-III, a bank should maintain the 12.50 per cent capital adequacy ratio (CAR), 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 for all banks.