One Bank’s perpetual bond to have convertibility clause
BSEC has allowed the bank to issue a non-convertible perpetual bond worth Tk400 crore
One Bank has called an extraordinary general meeting (EGM) on 3 December, 2020 for shareholders' approval to add a convertibility clause to its Tk400 crore perpetual bond.
The listed commercial bank revealed in early July this year that the Bangladesh Securities and Exchange Commission (BSEC) had accorded its consent to let the bank issue a non-convertible perpetual bond worth Tk400 crore to strengthen its Tier-1 capital.
The bank, on Sunday, informed its shareholders that the Bangladesh Bank, in its approval, has added a condition for convertibility of the bond in case of common equity Tier-1 capital shortfall for three consecutive quarters.
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According to the central bank's requirement, if the common equity Tier-1 capital remains less than the regulatory threshold of 4.5% of total risk weighted assets of the bank, for three quarters in a row, the bank will have to convert a portion of the debt into common equity.
The conversion would take place at the end of the third quarter of the capital shortfall.
The One Bank board approved the plan of convertibility clause and the bank is now waiting for the EGM.
The bank will identify its shareholders on the announced record date, 8 November, 2020.
Shareholders would join the meeting on a virtual platform.
According to ratings agency Emerging Credit Ratings Ltd, One Bank's long-term credit rating is "AA" and the short-term rating is "ST-2."
The bank decided to issue perpetual bonds in September last year.
A number of commercial banks in Bangladesh prefer issuing perpetual bonds to strengthen their Tier-1 capital as the international capitalisation standard Basel-III demands.
