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BSEC Approves Tk 400 Crore Subordinated Bond for Meghna Bank

The Bangladesh Securities and Exchange Commission (BSEC) has approved a proposal by Meghna Bank PLC to issue a Tk 400 crore seven-year subordinated bond to strengthen its capital base.

By Staff Correspondent
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BSEC approves Tk 400cr subordinated bond for Meghna Bank | Business
BSS

The Bangladesh Securities and Exchange Commission (BSEC) has approved a proposal by Meghna Bank PLC to issue a Tk 400 crore seven-year subordinated bond to strengthen its capital base. The approval was given at the 1026th commission meeting held today, chaired by BSEC Chairman Masud Khan, according to a BSEC press release. The approved instrument is a non-convertible, unsecured, fully redeemable, coupon-bearing, floating-rate subordinated bond. Its coupon rate will be set at the reference rate plus a 3 percent margin.

Strengthening Capital Base

The bond will be issued through private placement to corporate institutions, high-net-worth individuals, banks and financial institutions, provident and gratuity funds, and insurance companies. Each unit of the bond will have a face value of Tk 5 lakh. According to the BSEC, proceeds from the bond issuance will be used to strengthen Meghna Bank's Tier-II capital base under Basel III.

Roles and Responsibilities

DBH Finance PLC will act as the trustee of the bond, while BRAC EPL Investments Limited will serve as the issue manager. The commission approved the proposal at its meeting held at the BSEC office today. This move is expected to enhance Meghna Bank's financial stability and compliance with international banking standards.

Subordinated bonds are a critical tool for banks to bolster their capital reserves. These bonds rank below senior debt in the event of a liquidation, providing a cushion for depositors and senior creditors. By issuing this bond, Meghna Bank aims to improve its capital adequacy ratio, which is a key indicator of a bank's financial health.

The approval of this bond issuance is also a testament to the regulatory framework in place, ensuring that banks adhere to stringent financial norms. The BSEC's role in overseeing such activities underscores its commitment to maintaining the stability and integrity of the financial sector in Bangladesh.

Source: BSS

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