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BRAC Bank seeks to raise Tk 7 billion by issuing non-convertible subordinated bonds to strengthen its supplementary capital.
The decision was taken at a meeting of the board of directors on Wednesday, according to a disclosure posted on the Dhaka Stock Exchange.The bonds' tenure will be seven years.
Fully redeemable, coupon bearing, and floating rate subordinated bonds will be issued upon approval of the regulatory authorities, including the Bangladesh Bank and the Bangladesh Securities and Exchange Commission.
The proceeds will be treated as capital as it will help the bank expand investment and loan portfolio.
Subordinated bonds are unsecured, ranking below other securities when it comes to claims on assets or earnings.
Such debt securities mostly issued by banks dominate the local bond market. These help lenders construct their mandatory Tier II capital base.
BRAC Bank's consolidated earnings per share jumped 25 per cent year-on-year to Tk 0.96 in January-March this year.
Its annual profit also rose 10 per cent to Tk 6 billion in the year ended December 2022, compared to 2021. The bank declared 15 per cent dividend (7.5 per cent cash and 7.5 per cent stock) for 2022.
Meanwhile, the stock has remained stuck at the floor price of Tk 35.80 for the last three weeks.