Five banks to raise Tk 3,500cr through bonds

Five private commercial banks are set to raise a combined Tk 3,500 crore through bonds to strengthen their capital bases and expand their financing capacity.

The Bangladesh Securities and Exchange Commission (BSEC) approved the banks’ bond issuance proposals at a commission meeting chaired by Chairman Masud Khan yesterday.

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The approved instruments include subordinated bonds for One Bank, Southeast Bank, Al-Arafah Islami Bank, and Bank Asia, alongside a zero-coupon green bond for BRAC Bank, the stocks regulator said in a press statement.

All five bonds will be issued through private placement to institutional investors and high-net-worth individuals and subsequently listed on the main boards of the stock exchanges.

One Bank received approval to issue an unsecured, non-convertible, fully redeemable, floating-rate subordinated bond worth Tk 400 crore.

The bond will carry a coupon rate of the reference rate plus 3 percent, with a face value of Tk 1 lakh per unit. The proceeds will strengthen the bank’s Tier-II capital base in compliance with Basel III.

Green Delta Capital will act as trustee, while UCB Investment will serve as the issue manager for the bond.

Southeast Bank received approval to issue a seven-year subordinated bond worth Tk 800 crore.

The bond will carry a coupon rate of the reference rate plus 3 percent, with a unit price of Tk 5 lakh. The proceeds will be used to strengthen the bank’s Tier-II capital. DBH Finance PLC will act as trustee, while UCB Investment will serve as the issue manager.

BRAC Bank received approval to issue a three-year unsecured, non-convertible, fully redeemable, zero-coupon green bond worth Tk 1,000 crore.

Unlike conventional bonds, a zero-coupon bond does not pay periodic interest. Instead, it is issued at a discount and redeemed at face value at maturity.

The bond will be offered at an estimated discount rate of 8.5 percent, with a face value of Tk 10 lakh per unit. Eligible subscribers include corporate entities, provident funds, gratuity funds and high-net-worth individuals.

The proceeds will be used to provide low-cost green financing to clients. Prime Bank Investment will act as trustee, while IDLC Investments will serve as the issue manager.

Al-Arafah Islami Bank received approval to raise Tk 500 crore through a seven-year subordinated bond to strengthen its Tier-II capital.

The bond will carry a coupon rate of the reference rate plus 3 percent, with a unit price of Tk 5 lakh. DBH Finance will act as trustee, while UCB Investment will serve as the issue manager.

Bank Asia received approval to issue a seven-year unsecured, non-convertible, fully redeemable, floating-rate sustainable subordinated bond worth Tk 800 crore.

The bond will carry a coupon rate of the reference rate plus 3 percent, with a unit price of Tk 10 lakh. The proceeds will be used to strengthen the bank’s Tier-II capital and finance sustainable and environmentally friendly refinancing projects.

DBH Finance will act as trustee, while Prime Bank Investment will serve as the issue manager.

Meanwhile, the BSEC also approved the reconstituted board of Beximco Pharmaceuticals following verbal directions from the High Court.

The commission issued a no-objection decision on the proposed board reconstitution to safeguard investors’ interests.

The proposed nine-member board will comprise three sponsor directors — ASF Rahman, Osman Kaiser Chowdhury and Iqbal Ahmed — and a managing director, who is yet to be appointed. One director will represent financial institution IFIC Bank.

Of the four independent directors, three will be newly appointed, including at least one woman, in compliance with the Corporate Governance Code 2018.

The commission also withdrew two directives it had previously issued on the matter, subject to the company withdrawing its pending cases.