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Mercantile Bank wants to raise Tk 8 billion by issuing subordinated bonds to strengthen its capital base under Basel-III compliance as per the Bangladesh Bank's December 2014 guidelines on risk-based capital adequacy.
The bond issuance is subject to the approval of the regulatory authorities concerned- the Bangladesh Bank and the Bangladesh Securities and Exchange Commission, according to a stock exchange filing on Monday.
The listed commercial bank informed that the board of directors in a meeting on Sunday decided that the company would issue unsecured, non-convertible, fully redeemable, coupon-bearing floating rate bonds.
The name of the bond will be Mercantile Bank 3rd Subordinated Bond.
According to the financial statement for 2024, the bank had Tk 0.6 billion in financing from subordinated bonds. The figure was Tk 1.2 billion in 2023.
Banks are required to maintain a certain level of capital to ensure their financial stability and protect depositors. The bond proceeds will be treated as capital and it will help the bank grow its investment and loan portfolio.
Subordinated bond is an unsecured loan or bond that ranks below other, more senior loans or securities with respect to claims on assets or earnings. Subordinated bonds are thus also known as junior securities.
Financial performance
Mercantile Bank's profit fell by more than 68 per cent year-on-year to Tk 0.63 billion in 2024.
The board of directors recommended no dividend for 2024.
Meanwhile, the stock of the bank closed at Tk 7.7 per share on Monday on the Dhaka Stock Exchange, remaining unchanged from the previous day.
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