Commercial Bank plans up to Rs.20bn Tier 2 debenture issue

Commercial Bank announced plans to raise up to Rs.10 billion, with an option to increase the issue to Rs.20 billion, through the issuance of Basel II-compliant Tier 2 listed rated unsecured subordinated redeemable debentures, subject to regulatory and shareholder approvals.

In a disclosure to the Colombo Stock Exchange the bank said that its board of directors approved the proposal at a meeting held on January 30, 2026. 

The proposed issue will comprise 100 million debentures, priced at Rs.100 each, amounting to Rs.10 billion, with maturities of five, seven and 10 years. The debentures will carry a non-viability conversion feature, in line with the prevailing regulatory requirements for capital instruments. Commercial Bank said it also retains the discretion to issue up to a second tranche of 50 million debentures, amounting to Rs.5 billion, in the event of an oversubscription of the initial issue. 

A further Rs.5 billion may be raised through an additional tranche, if the demand continues to exceed supply, potentially taking the total size of the debenture programme to Rs.20 billion. The bank noted that the issuance is subject to all necessary approvals and other conditions.

The Tier 2 capital instruments are typically used by the banks to strengthen their capital adequacy ratios and support the balance sheet growth, particularly in a regulatory environment that places emphasis on resilience and loss-absorbing capacity.