Brac Bank plans to raise Tk 500cr through bonds

Brac Bank plans to raise Tk 500 crore by issuing subordinated bonds to expand business and consolidate capital base for fulfilling Basel-II requirements.

"The board of directors has decided to issue the subordinated bonds with the tenure of 84 months to meet regulatory capital requirement as well as the need of business growth," the bank said in a posting on the Dhaka Stock Exchange yesterday.

The issuance of the bond is, however, subject to approval of regulatory authorities, including the Bangladesh Securities and Exchange Commission.

A subordinated bond is a debt security. It is referred to as subordinate because debt providers (lenders) have a subordinate status in relationship to the normal debt. It is also known as subordinated loan, debenture or junior debt that carries a lower-priority claim on the issuer's income or assets than that of other debt.

It is called term debt because it has a fixed maturity period.

Such a debt has been designed to help banks boost their capital base in line with the requirements of Basel-II, a core guideline for banks in capital adequacy and risk management.

The board of Brac Bank also approved the audited half yearly financial statements in line with the issuance plan of the subordinated bonds.

The six-month consolidated earnings-per share rose to Tk 2.52 at the end of June this year, from Tk 1.44 during the same period a year ago.

The consolidated net operating cash flow per share stood at Tk 12.99 at the end of June, while the consolidated net asset value per share stood at Tk 31.40, according to the audited half yearly financial statements of the bank.

The bank's net profit rose to Tk 232.33 crore in 2015, from Tk 205.13 crore a year earlier.

It was listed on the stockmarket in 2007. Each share of the bank traded between Tk 60 and Tk 61.1, before closing at Tk 60.1 on the premier bourse yesterday.

Sponsors hold a 44.57 percent stake in Brac Bank, institutions 7.08 percent, foreign investors 41.31 percent and general investors the rest 7.04 percent, according to the DSE.