UCB to issue bond worth Tk1,000cr for regulatory capital
The bond will count as Tier-II capital, according to a decision made at the bank’s board meeting on 19 June, which was disclosed through a price-sensitive information notice in newspapers and on its website
After announcing plans to raise core capital through issuing fresh shares to a strategic investor and rights share issuance, United Commercial Bank – a publicly listed private lender – has now decided to issue a Tk1,000 crore subordinated bond to meet regulatory capital requirements.
The unsecured, non-convertible, and redeemable bond will be the bank's sixth such issuance, with a tenure of seven years, subject to regulatory approval.
The bond will count as Tier-II capital, according to a decision made at the bank's board meeting on 19 June, which was disclosed through a price-sensitive information notice in newspapers and on its website.
Tier-II capital refers to the supplementary layer of a bank's regulatory capital. It typically includes instruments such as revaluation reserves, hybrid capital instruments, and subordinated term debt.
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In early June, UCB announced plans to issue new shares amounting to 50% of its audited paid-up capital to a strategic investor. Additionally, it proposed issuing rights shares at a 2:1 ratio – one right share for every two existing shares – at face value, as part of its effort to strengthen core capital.
According to a stock exchange disclosure on 1 June, UCB plans to raise new capital equivalent to 50% of its audited paid-up capital.
Based on current estimates, this would amount to around Tk750 crore. The offer price for the new shares will be finalised through negotiations with the strategic investor and disclosed in due course, the stock filing stated.
Though the bank has not disclosed any names of potential investors, sources familiar with the matter told TBS that UCB has appointed two Singapore-based investment banks to scout for suitable strategic investors.
On 19 June, the bank's share price closed at Tk10.10 each on the Dhaka Stock Exchange (DSE).
According to its 2024 report, UCB's net interest income surged by 30% to Tk2,115 crore, while total operating income rose by 23% to Tk3,812.67 crore – driven mainly by gains from investment income, commission, exchange and brokerage, and other operating income.
Profit before provision increased to Tk1,478.82 crore, up from Tk959.39 crore in 2023. The bank set aside a total provision of Tk1,291 crore for 2024, compared to Tk455.66 crore the previous year.
Its consolidated net profit after tax stood at Tk8 crore in 2024, with an earnings per share (EPS) of Tk0.05 – down sharply from a net profit of Tk219.76 crore and EPS of Tk1.45 in 2023.
As of December 2024, the bank's required loan-loss provision stood at Tk6,055 crore, but it managed to maintain only Tk2,706 crore, leaving a shortfall of Tk3,345 crore.
