Rupali Bank is set to nearly double its paid-up capital after securing regulatory approval to issue Tk 6.80 billion worth of ordinary shares to the government against accumulated share money deposits.
In a regulatory filing on Monday, the state-owned lender said the Bangladesh Securities and Exchange Commission (BSEC) approved the issuance of 453.3 million ordinary shares at Tk 15 each - face value of Tk 10 plus Tk 5 premium.
The shares will be issued to the secretary of the Finance Division under the Ministry of Finance against funds that had already been injected into the bank over the years to bolster its capital.
Share money deposit refers to funds received in exchange for shares that have not yet been formally issued. The latest approval will lead to conversion of the deposits received by the bank into equity, strengthening the bank's capital structure without requiring any fresh cash injection from the government.
The new shares will significantly expand Rupali Bank's equity base but will also dilute the ownership of existing shareholders, market operators said.
The listed state-owned lender currently has about 488 million outstanding shares. After the issuance of the new shares, it will have around 941 million shares. The bank's paid-up capital will jump from Tk 4.88 billion to Tk 9.41 billion, substantially improving its capital position.
However, the enlarged share base is expected to dilute earnings per share (EPS) unless the bank is able to improve profitability significantly in the coming years.
The government's ownership is also expected to increase from the existing 90.19 per cent, while the holdings of institutional investors and general shareholders-currently 3.17 per cent and 6.64 per cent respectively-will decline proportionately.
The move follows a 2020 directive issued by the Financial Reporting Council (FRC), which instructed state-owned entities to convert accumulated share money deposits into equity so that government investments are properly reflected in their capital structure and generate returns through shareholding.
Several other listed state-owned enterprises including Titas Gas, Power Grid Bangladesh, Dhaka Electric Supply Company, and Bangladesh Submarine Cable Company have already implemented similar conversions in recent years.
Investors responded positively to the announcement as Rupali Bank's share price surged 0.59 per cent to close at Tk 17.10 on the DSE on Monday.
Financial health remains under pressure
Rupali Bank continues to face severe financial challenges stemming from rising non-performing loans and weak earnings.
It incurred a consolidated loss of Tk 3.96 billion in the January-March quarter this year, compared to a profit of Tk 66 million in the same period a year ago.
According to the bank, the sharp deterioration resulted mainly from negative net interest income, as interest expenses on deposits exceeded interest earned from loans, reflecting both rising fund costs and weak loan recovery.
The lender's profitability has weakened steadily over the past three years. Annual net profit declined from Tk 627 million in 2023 to Tk 114 million in 2024 before dropping another 40 per cent to only Tk 68 million in 2025.
The lender managed to remain profitable in 2025 with a Tk 140 billion provisioning shortfall, largely because it availed itself of special regulatory forbearance provided by Bangladesh Bank.
The lender failed to declare dividends for both 2024 and 2025 due to the provisioning deficit, causing its relegation to the Z category in the stock market in May this year.
Under Bangladesh Bank's dividend policy introduced last year, banks failing to maintain required loan-loss provisions or relying on provisioning deferrals are barred from paying dividends from 2024 onward. From 2025, banks with classified loans exceeding 10 per cent of total outstanding loans are also prohibited from declaring dividends regardless of profitability.
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