Mutual Trust Bank PLC (MTB) has decided to raise Tk 5 billion as Tier-II capital through the issuance of a seven-year subordinated bond as the bank moves to strengthen its regulatory capital base.
The decision was taken at the bank’s board meeting held on Tuesday last, according to a disclosure made by the bank on Thursday.
Under the plan, MTB will issue a seven-year subordinated bond, which may be structured as either an Islamic Shariah-compliant or conventional instrument. The proposed issuance, however, will require approval from the relevant regulatory authorities before it can be implemented.
The move comes as banks in Bangladesh continue to focus on strengthening their capital positions to meet regulatory requirements and support business growth.
Tier-II capital forms part of a bank’s regulatory capital and generally includes subordinated debt instruments that rank below depositors and other senior creditors in the event of liquidation. Banks can use such instruments to strengthen their capital adequacy position without immediately raising additional common equity.
For MTB, the proposed Tk 5 billion fundraising is expected to provide an additional buffer for meeting regulatory capital requirements and support the bank’s future lending and investment activities, subject to the terms and conditions approved by the regulators.
The bank has not yet disclosed the detailed terms of the proposed bond, including its coupon or profit rate, issue price, payment structure, or whether the final instrument will be conventional or Shariah-compliant.
The bank said the proposed capital raising remains subject to approval from the relevant regulatory authorities. Therefore, the final issuance structure and other terms may depend on the approvals and conditions imposed by the regulators.
The proposed bond will have a maturity of seven years, making it a relatively long-term source of supplementary capital for the bank.
Listed in 2003, its stock price closed at Tk 13.40 on Tuesday last.
