BSEC approves Tk1,300cr bonds for Pubali, Jamuna banks

The Bangladesh Securities and Exchange Commission (BSEC) has approved bond issuances worth Tk1,300 crore for two banks – Pubali Bank and Jamuna Bank – to strengthen their capital bases under the Basel III framework.

According to a BSEC press release issued today (23 September) following a commission meeting, Pubali Bank received approval to raise Tk500 crore, while Jamuna Bank was permitted to raise Tk800 crore. Both banks will use the proceeds to reinforce their Tier-2 capital, as required by international capital adequacy standards.

Bangladesh adopted Basel III guidelines in January 2015, after Bangladesh Bank revised capital adequacy standards in December 2014. Under the framework, banks were required to raise their minimum capital adequacy ratio (CAR) to 12.5% by the end of 2019, up from 10% under Basel II. The rules are based on global standards set in the aftermath of the 2007–08 financial crisis to ensure greater resilience against economic shocks.

In 2024, Pubali Bank's CAR stood at 13.77%, while Jamuna Bank maintained 16.37%. Although both figures are comfortably above the regulatory requirement, industry insiders noted that expanding loan portfolios are gradually putting pressure on CAR. Foreign banks doing business with the local banks prefer to maintain CAR levels at 14% or higher, pushing local banks to raise capital through subordinated bonds to remain competitive.

Under the approval, Pubali Bank will issue an unsecured, non-convertible, redeemable, floating-rate subordinated bond with a reference rate plus a 3% coupon margin. 

The funds will be raised via private placement to institutional investors and high-net-worth individuals, with each bond unit valued at Tk5 lakh. 

DBH Finance has been appointed as the trustee, while UCB Investment, Prime Bank Investment, and IDLC Investments will act as lead arrangers. The bond will also be listed on the alternative trading board of the stock exchange.

Jamuna Bank received approval for a similar bond structure—unsecured, non-convertible, redeemable, and floating-rate subordinated debt with a reference rate plus 3% coupon margin. Each unit will also carry a Tk5 lakh face value and be issued through private placement. DBH Finance will act as trustee, with UCB Investment Limited serving as the lead arranger. Like Pubali Bank's issue, Jamuna Bank's bond will be listed on the alternative trading board.

Regulators and bankers see such issuances as part of a broader effort to deepen Bangladesh's bond market, which remains underdeveloped compared to its equity market, while simultaneously helping banks meet stricter global capital standards.