Two listed private commercial banks - Trust Bank and Exim Bank -- have decided to issue subordinated bonds worth Tk 8 billion in total for strengthening their Tier- II capital base under Basel-III norms.
The issuance of the bonds needs to comply with the regulatory requirements and be approved by regulators, such as the Bangladesh Bank and the Bangladesh Securities and Exchange Commission, according to a stock exchange filing on Wednesday.
The board of directors of Trust Bank has approved the issuance of seventh subordinated bonds worth Tk 5 billion.
Subordinated debt (debenture) is a loan or security that ranks below other loans or securities when it comes to settling claims on assets or earnings.
Trust Bank wants to strengthen the capital base to meet the requirements for Tier- II capital base to support the bank's Basel-III compliance as per the Bangladesh Bank's December 2014 guidelines on risk-based capital adequacy.
The lender will issue the bonds to fulfill the requirement of Basel III.
The board of directors of Exim Bank has accorded its approval for the issuance of Exim 6th subordinated bonds worth Tk 3 billion.
Bonds with a maturity period of seven years will be non-convertible, unsecured, fully redeemable, and will have floating rates.
The bank wants to strengthen Tier- II capital under Basel-III norms through private placement.
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