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BSEC approves two bonds worth Tk1,400cr

Staff Correspondent
21 Dec 2023 21:46:26 | Update: 21 Dec 2023 21:46:30
BSEC approves two bonds worth Tk1,400cr

Rupali Bank and LankaBangla Finance have received regulatory approval to raise a hefty fund of Tk 1,400 crore from the capital market, through bonds aimed at strengthening their capital base and increasing investment funds.

The Bangladesh Securities and Exchange Commission (BSEC) – the securities regulator – gave approval to the lenders’ bond proposals at a meeting held at the Agargaon office on Thursday with its Chairman Shibli Rubayat Ul Islam in the chair.

As per the regulatory approval, the state-run commercial lender Rupali Bank would issue a non-convertible, unsecured, fully redeemable, floating-rate, subordinated bond to raise funds worth Tk 1,200 crore.

At the same meeting, the commission also approved the issuance of LankaBangla Finance’s 4th privately placed non-convertible, zero-coupon bond worth Tk 200 crore.

Rupali Bank

Rupali Bank would use the funds to cement its tier-2 capital base under BASEL 3, the BSEC said in a press release. The funds would be raised through private placements with a unit price of Tk 1 crore each.

Financial institutions, insurance companies, corporate bodies, asset management companies, mutual funds, and high-net-worth individuals are allowed to purchase the bond units through private placements.

The coupon rate of this bond is the reference rate plus a two per cent coupon margin.

BRAC EPL Investments Ltd would act as the trustee of the bond, while City Bank Capital would be the arranger of the bond. The bond would be traded on the alternative trading board (ATB) of the stock exchanges.

The securities regulator has approved a 2 per cent stock dividend proposed by Rupali Bank for 2021 after the central bank rejected its cash dividend proposal.

The BSEC had earlier directed the bank not to declare any stock dividends because the bank has never given any cash dividends to its investors since 1986 when it was listed on the stock exchanges.

In contrast, the Bangladesh Bank did not approve the bank's 2 per cent cash dividend proposal due to regulatory constraints.

Its paid-up capital is Tk 464 crore. The company was downgraded to the ‘B’ category from the ‘A’ category on August 10, 2022 because of the approval of a 2 per cent cash dividend.

On Thursday, the bank’s share remained unchanged at Tk 27.70 on the Dhaka bourse.

LankaBangla Finance

LankaBangla Finance would issue the bond to strengthen investment funds for disbursement loans to the personal, corporate, and SME sectors. The per-unit price of the bond has been fixed at Tk 833,333.33 for private placement holders.

The BSEC also asked the company to get listed on the alternative trading board (ATB) of the bourses. The discount rate of this bond is 9 per cent to 10 per cent.

Green Delta Capital would act as the trustee of the bond, while LankaBangla Finance would act as the arranger of the bond. LankaBangla Finance reported a significant decline in its consolidated profits in the January-March quarter of 2023.

The company’s net profit stood at Tk 8 crore in the quarter, reflecting a 65 per cent decrease compared to Tk 23.17 crore in the same quarter last year.

Its consolidated earnings per share (EPS) for the January-March quarter of 2023 were Tk 0.15, down from Tk 0.43 for the same quarter of 2022.

Additionally, the company’s consolidated net operating cash flow per share (NOCFPS) was Tk 0.22 negative for the first quarter this year, which was Tk 3.49 for the first quarter of 2022.

The consolidated net asset value per share (NAVPS) of the company as of March 2023 was Tk 19.41, down from Tk 20.02 till December 2022.

The listed firm’s earnings slumped due to several factors, including the interest rate cap imposed by regulators since the second half of 2022, deteriorated asset quality in Covid-19 time, and lower brokerage commissions resulting from reduced turnover in both bourses.

Meanwhile, the decrease in NOCFPS happened to higher cash outflows due to deposit settlements and other asset settlements, the company said in its recent financial report. The company’s shares closed at Tk 26 each on the DSE trading floor on Thursday.

LankaBangla Finance has three subsidiaries – LankaBangla Securities, LankaBangla Investment, and LankaBangla Asset Management Company Ltd.