Sat, 25 Sep 2021 Today's Paper

Sampath Bank to raise Rs.6bn via convertible debentures

3 July 2017 09:34 am - 0     - {{hitsCtrl.values.hits}}

A A A

Sampath Bank PLC last week announced plans to issue debentures to raise up to Rs.6 billion in view of the BASEL III capital adequacy rules and also to support growth. 
The subordinated, convertible debentures, which will qualify under the Tier II capital, will strengthen the bank’s total capital base. But the bank also needs equity, which can support its Tier I 
capital base.  
But it appears that the proposed debenture’s quality of being able to ‘convert’ at a later stage desired by the issuer will make the instrument also qualify under the Tier I.   

Fitch Ratings in 2015 downgraded Sampath Bank’s national long term rating to A+ from AA- with a ‘Stable’ outlook before the outlook being revised down to ‘Negative’ in expectation of further worsening capitalization beyond previous expectations. 
“Fitch does not believe Sampath can sustain its capitalization purely through retained earnings. The bank’s rating reflects its lower capitalization and higher risk appetite relative to peers, which counterbalance its satisfactory asset quality and improving franchise”, Fitch said.
By March 31, 2017, Sampath Bank’s Tier II capital adequacy ratio stood at 11.93 percent while the Tier I capital adequacy ratio, which contains purely the shareholder funds and retained earnings in relation to its risk weighted assets— stood at 7.68 percent. But according to the new BASEL III rules, the minimum regulatory requirements for Tier I and Tier II go up to 10 percent and 14 percent respectively by January 1, 2019 from the current 5.0 percent and 10 percent. The bank will initially issue 40,000 convertible debentures at an issue price of Rs.100 with an option to issue up to a further 20,000 in the event of the initial tranche being oversubscribed.The debenture issue also demonstrates that the issuers are unfazed by the government’s decision to lift the tax exemptions hitherto available on listed debentures. Sampath Bank PLC, which has an asset base in excess of Rs.692 billion, reported a net profit of Rs.2.39 billion for its January- March quarter, an increase of 30 percent over the same period last year.  
The data showed that Sri Lanka’s banks have been growing their loan books faster than their internal capital generation in the recent past.      

 

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

  Comments - 0

See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 


Add comment

Comments will be edited (grammar, spelling and slang) and authorized at the discretion of Daily Mirror online. The website also has the right not to publish selected comments.

Reply To:

Name - Reply Comment




See Kapruka's top selling online shopping categories such as Toys, Grocery, Flowers, Birthday Cakes, Fruits, Chocolates, Clothing and Electronics. Also see Kapruka's unique online services such as Money Remittence,News, Courier/Delivery, Food Delivery and over 700 top brands. Also get products from Amazon & Ebay via Kapruka Gloabal Shop into Sri Lanka.

 


A state-sponsored elephant racket in the works

A controversial new gazette has been issued seeking to employ elephants for w

Waiver of registration questioned: Import of covid related drugs, products shrouded in controversy

The National Medicines Regulatory Authority- the independent authority that r

Mysterious disease killing pups!

A mysterious respiratory disease affecting puppies in the Central Province is

Jacqueline Fernandez; Lankan Star Shining in Indian Film Sky

Sri Lanka’s Jacqueline Fernandez who has made a name for herself in India