UCB to open exchange outlet in Hong Kong

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

“The board of directors has decided to form the subsidiary company having paid-up capital of HK$ 5,000,000.00 (fifty lakh) (Equivalent to USD 650,000) in Hong Kong

to conduct trade finance and other business subject to the approval of the regulatory authorities,” said the bank in a filing with the Dhaka Stock Exchange.

Earlier in February, the UCB had announced setting up a subsidiary company in Singapore with a paid-up capital of $0.9 million.

The UCB announcement came two months after another privatebank -- City Bank – declared to set up a subsidiary company in Singapore with an investment of Tk 12.6 crore.

This is subject to approval from the Bangladesh Bank and the Monetary Authority of Hong Kong. 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.

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

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 per cent 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.