Union Bank to raise Rs.3bn through debenture issue to strengthen capital

Union Bank of Colombo PLC has announced plans to raise up to Rs.3 billion through a listed debenture issue aimed at strengthening its capital base and supporting strategic growth initiatives. 

The bank’s Board of Directors has approved the issuance of up to 30 million BASEL III-compliant, Tier 2, listed, rated, unsecured, subordinated, and redeemable debentures at Rs.100 each. The move is intended to enhance the bank’s Tier 2 capital, ensuring compliance with regulatory adequacy requirements, and to increase its lending capacity, with a particular focus on Small and Medium-sized Enterprises (SMEs) and other priority sectors. The issuance is subject to shareholder and regulatory approvals.

The announcement comes as the bank reported strong financial performance for the first half of 2025. For the six months ending June 30, 2025, Union Bank recorded a Profit After Tax (PAT) of Rs.251 million, a significant 247 percent increase compared to the same period in 2024. The Group’s total assets grew to Rs.171 billion, while net loans and advances surpassed Rs.100 billion. As of June 30, 2025, the bank maintained a Total Capital Adequacy Ratio (CAR) of 13.65 percent and a Tier I CAR of 12.64 percent, both well above the minimum regulatory thresholds. The new debenture issue is expected to further fortify this position.

Union Bank Director/CEO Dilshan Rodrigo stated, “Our decision to issue this debenture reflects our confidence in the bank’s trajectory and our commitment to sustainable growth”. He added, “By enhancing our capital structure, we are better positioned to support our customers, expand and seize new opportunities arising in Sri Lanka’s evolving economic landscape”.

The debentures will be offered to “Qualified Investors” as defined by the Colombo Stock Exchange (CSE) Listing Rules. The tenure, coupon rates, and other terms will be determined by the Board and announced prior to the issue’s opening. The bank has confirmed it will apply to the CSE to list the debentures in due course.