Eastern Bank to float Tk800cr subordinated bond to boost capital
The bond, with a tenure of seven years, will be issued through private placement, subject to approval from regulatory authorities
Eastern Bank has announced plans to raise Tk800 crore by issuing a subordinated bond in a bid to strengthen its capital base and comply with Basel III requirements.
In a disclosure filed with the Dhaka Stock Exchange yesterday, the private lender said its board of directors, in a meeting held on 24 September, approved the issuance of an unsecured, non-convertible, fully redeemable, floating rate, coupon-bearing subordinated bond.
The bond, with a tenure of seven years, will be issued through private placement, subject to approval from regulatory authorities.
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The move comes as part of the bank's strategy to enhance its Tier-II capital under the global Basel III framework, which Bangladesh adopted in 2015 following the central bank's revision of capital adequacy standards.
The rules require local lenders to maintain a minimum capital adequacy ratio (CAR) of 12.5% against risk-weighted assets, up from 10% under Basel II, to withstand potential shocks.
Eastern Bank has so far maintained a healthy capital buffer. At the end of 2024, its consolidated CAR stood at 14.65%, while its solo CAR was 15.11%.
However, bankers say that expanding loan portfolios are gradually exerting pressure on capital ratios. At the same time, foreign counterparties often prefer local banks to keep CAR levels at 14% or above, encouraging institutions like Eastern Bank to raise funds through subordinated bonds.
By issuing the Tk800 crore bond, Eastern Bank looks to ensure long-term capital stability and preserve investor confidence as competition intensifies in the banking sector, according to the market insiders.
Despite the announcement, Eastern Bank's share price edged down slightly by 0.40% to close at Tk24.90 yesterday.
The bank's recent financial performance, however, has been strong. In the first half of 2025, it posted a consolidated net profit of Tk351.28 crore, up 9% year-on-year, with earnings per share rising to Tk2.20 from Tk2.02.
Its consolidated net asset value per share at the end of June was Tk27.71.
In 2024, the bank reported a consolidated net profit of Tk659.89 crore, marking an 8% increase from the previous year, driven by solid growth across its core business segments. Consolidated earnings per share rose to Tk4.86 from Tk4.51.
Reflecting its financial strength, the board declared a 35% dividend for 2024, the highest payout since 2020, comprising equal parts cash and stock. This followed a 25% dividend in 2023.
