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Sampath Bank to raise up to Rs.6.0bn via debenture issue

5 February 2021 09:12 am - 0     - {{hitsCtrl.values.hits}}

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  • Aimed at staying above minimum capital adequacy levels and support growth 
  • Fitch Ratings in Dec. said Lankan banks would experience acceleration in credit
Sampath Bank PLC this week announced plans to issue BASEL III-compliant bonds to raise capital in order to stay above the minimum capital adequacy levels stipulated by the BASEL III regulations and also in view of the envisaged growth in loans as the banking sector is bracing for an acceleration in private sector credit during 2021. 
 
In a stock exchange disclosure, the bank said it would initially issue 50 million debentures, which will qualify under the bank’s Tier II capital, at a nominal value of Rs.100 each to raise Rs.5.0 billion, and would follow through with another 10 million tranche to upgrade the issue up to Rs.6.0 billion in the event of an oversubscription of the initial tranche. 
 
Fitch Ratings in December said the Sri Lankan banks would experience an acceleration in credit sparked by the appetite for private sector credit as the economy will make up for the lost output in 2020 due to the pandemic. 

Sampath Bank is due to report its fourth quarter financial performance in the coming weeks and the results are expected to be better amid better credit disbursements. 
The bank’s earnings for the quarter ended September 30, 2020, fell by 53.1 percent to Rs.1.22 billion from the same quarter in 2019 due to subdued growth in loans, margin squeeze and higher loan loss provisions. 

By the end of September 2020, the bank’s common equity Tier I and Tier I ratios stood at 13.07 percent each while the Tier II capital ratio stood at 16.03 percent when the minimum requirement for each for 2020 were 6.5 percent, 8.0 percent and 12.0 percent respectively.  The Monetary Board in January suspended cash dividends by banks until their year-end accounts for 2020 were finalised and audited, effectively lifting an earlier suspension on cash dividends.
 

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