Bank Asia PLC, a leading private sector bank, has announced plans to issue a Tk800 crore bond to strengthen its capital base through private placement. This floating rate non-convertible subordinated bond, intended to raise regulatory capital (Tier-2), aims to help the bank meet its Basel-III requirements.
The decision was approved by the board of directors during a meeting on June 4, as disclosed in stock exchanges on Wednesday, June 5. The seven-year term bonds are subject to approval from the Bangladesh Securities and Exchange Commission (BSEC) and the Bangladesh Bank.
Subordinated bonds, primarily issued by banks, dominate the local bond market, aiding lenders in building their mandatory tier-2 capital base within a specific tenure. The Bangladesh Bank’s implementation of Basel-III ensures that banks maintain sufficient capital to avert systemic risk.
Basel-III is an international regulatory accord introducing reforms to mitigate risk within the global banking sector by requiring banks to maintain proper leverage ratios and reserve capital levels.
For the first quarter of 2024, Bank Asia PLC reported a profit of Tk77.88 crore, a 41% decrease compared to the same period the previous year. Despite a 33.63% increase in operating income to Tk634.77 crore, the earnings per share (EPS) dropped to Tk0.67 from Tk1.14 in the first quarter of 2023.
The company attributed the decline in EPS to higher provisions, which rose to Tk192 crore from Tk45 crore in the same quarter of the previous year.
