The Bangladesh Securities and Exchange Commission (BSEC) has rejected an application by AB Bank seeking the regulator's approval to issue the right shares.
Right shares are new shares that are issued by a company only for its existing shareholders.
In a disclosure on Sunday, the first-generation private lender said the BSEC expressed inability to approve the right issue after considering the bank's dividend payment history, and present financial position published on local stock exchanges.
Earlier in April this year, the bank decided to issue right shares in a ratio of 1R:6 at Tk10 each after stock dividends for 2020 went into effect.
That is, one right share would be issued for every six existing shares to strengthen the bank's equity capital base.
At that time, the bank had said right shares would be issued with the approval of shareholders, the BSEC, and other regulatory authorities.
In its annual general meeting held on 10 June this year, bank shareholders approved the proposal.
This year, the bank logged a profit of Tk39.40 crore and earnings per share (EPS) stood at Tk0.50.
The bank paid a 5% stock dividend for 2020 to strengthen the capital base and to support business growth in compliance with Bangladesh Bank's 2020 policy on bank dividends.
Earlier, in 2019, its net profit was Tk12.32 crore and the bank paid a 5% stock dividend.
AB Bank has also decided to issue a perpetual bond worth Tk600 crore for the enhancement of its Additional Tier-1 Capital.
As per the decision, the bond will be issued in two portions: public issuance and private placement. There would be a public issue of Tk60 crore and a private placement issue with a value of Tk540 crore.
AB Bank shareholders have approved the decision but the lender is yet to be granted regulatory approval to issue the bond.