IFIC Bank to issue Tk500cr subordinated bond

International Finance Investment and Commerce (IFIC) Bank will issue a bond worth Tk500 crore and use the proceeds to increase the private sector lender's capital base.

The non-convertible subordinated bond is expected to help the bank fulfil its Basel III requirements.

The decision was made at its board meeting on 29 August.

The bank will set the tenure of the bond after getting approval from the Bangladesh Securities and Exchange Commission and the Bangladesh Bank.

Earlier, the share market regulator approved the Tk500 crore bond for IFIC Bank in July this year.

Currently, the local bond market is dominated by subordinated bonds mainly issued by banks. These help the lenders construct their mandatory Tier 2 capital base through the bond proceeds within a specific tenure.

The Bangladesh Bank is implementing Basel III in the local banking industry so that banks have adequate capital to avert a systematic risk.

Basel III is an international regulatory accord that introduced a set of reforms designed to mitigate risk within the international banking sector by requiring banks to maintain proper leverage ratios and keep certain levels of reserve capital in hand.

IFIC Bank in the first half of this year posted consolidated earnings per share (EPS) of Tk0.91, which was 78% higher than that in the same time of the previous year.

Its shares closed at Tk16.30 at the Dhaka Stock Exchange on Sunday.