Dhaka Bank shareholders approve Tk400cr perpetual bond
The bond will strengthen the bank’s Additional Tier-I capital to support its Basel-III compliances
Dhaka Bank has secured its shareholders' approval to issue perpetual bonds worth Tk400 crore to comply with Basel-III.
The approval came at the listed commercial bank's annual general meeting on Tuesday.
The perpetual bond would strengthen the bank's Additional Tier-I capital to support its Basel-III compliances.
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Basel-III is an international guideline for banks' capital adequacy which enables banks to withstand shocks in business.
Bangladeshi banks are in a trend to issue perpetual bonds. Such bonds do not have any tenure and the money raised through them are considered banks' Additional Tier-I capital.
Banks can convert the bond liabilities into their equity in case of equity shortfall.
Bondholders cannot surrender their perpetual bond units to the issuer because of its nature.
But the regulator allows the issuer to recall the bonds in certain cases, such as an interest rate mismatch after a certain time, for example, a decade.
Dhaka Bank, beginning its journey in the mid-1990s, entered the stock market in 2000 and grew its paid-up capital to nearly Tk900 crore.
Its market capitalisation was Tk1,273 crore on Tuesday as its share price inched up by 0.73% to Tk13.8 against the face value of Tk10 each.
According to Emerging Credit Rating, Dhaka Bank's long term credit rating is AA, which is ST-2 for short term.
A credit rating is a quantified assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation.
