UCB to issue Tk1,000cr subordinated bond

The United Commercial Bank (UCB) will issue a bond worth Tk1,000 crore and use the proceeds to increase the private sector lender's capital base.

The unsecured, non-convertible and redeemable subordinated bond is expected to help the bank fulfil its Basel-III requirements. The decision was made at its board meeting on 21 December.

The bank has set the tenure of the bond for seven years, which will be implemented after getting approval from the Bangladesh Securities and Exchange Commission and the Bangladesh Bank.

Currently, the local bond market is dominated by subordinated bonds mainly issued by banks. These help lenders construct their mandatory Tier-2 Capital base through the bond proceeds within a specific tenure.

The Bangladesh Bank is implementing Basel-III in the local banking industry so that banks have adequate capital to avert a systematic risk.

Basel-III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain proper leverage ratios and keep certain levels of reserve capital in hand.

The UCB in the first three quarters of this year posted consolidated earnings per share of Tk1.65, which was 20% higher than that in the same time of the previous year.

The bank paid a 5% cash and 5% stock dividend to shareholders for the 2020. In that year, its consolidated earnings per share was Tk2.42, which was Tk2.35 a year ago.

In the last one month, its share price dropped 11% and closed at Tk15.80 on Wednesday at the Dhaka Stock Exchange.