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This bond will pave way for recapitalisation of banks through optimising their capital structure via a more efficient mix of debt and equity
City Bank on Tuesday held a subscription closing ceremony to mark the issuance of the country’s first-ever Basel-III compliant perpetual bond worth Tk 400 crore.
A perpetual bond is a fixed income security with no maturity date and is often considered as a type of equity rather than debt.
These types of bonds are not redeemable but instead provide a never-ending stream of interest payments.
It is set to become a critical tool to support expansion of the banking sector in the coming years, according to a press release.
This bond will pave way for recapitalisation of banks through optimising their capital structure via a more efficient mix of debt and equity, the release also said.
It is an alternative to raising capital from existing shareholders.
The bank entered into partnerships with several institutions for successfully issuing the floating-rate perpetual bond, among whom City Bank Capital Resources was selected to be the mandated arranger to the issue.
The issue enhanced tier-I capital of City Bank following “Guideline of Risk Based Capital Adequacy” of Bangladesh Bank; thus increasing its total capital adequacy ratio.
Earlier in June, the bank got the approval from the Bangladesh Securities and Exchange Commission (BSEC) to begin issuing the bonds.
Salman F Rahman, private industry and investment adviser to the prime minister, delivered a speech from a remote location as chief guest.
Among others, Prof Shibli Rubayat Ul Islam, chairman, BSEC, Ahmed Jamal, deputy governor, Bangladesh Bank, Aziz Al Kaiser, chairman of City Bank and Aziz Al Mahmood, chairman of City Bank Capital Resources, were also present.
(DT)
