Islami Bank to issue Tk 1,000 crore bond to strengthen capital

Islami Bank Bangladesh, the largest and oldest shariah-based bank in the country, today announced that it would borrow Tk 1,000 crore through the issuance of bonds to improve its capital adequacy in line with Basel-III.

The board of the bank decided to issue the debt instrument to meet the tier-2 regulatory capital, the second layer of the capital that a bank must maintain as part of its required reserves.

In a filing on the Dhaka Stock Exchange today, Islami Bank said the IBBPLC Fifth Mudaraba Redeemable Non-Convertible Subordinated Bond will have a floating or variable interest rate.

Because of its nature, the bonds can't be converted into shares or equities and holders will be repaid after senior debtors are repaid in full.

The bonds will be issued in one or more tranches on a private placement basis. 

Basel-III is an internationally agreed set of measures to strengthen the regulation, supervision and risk management of banks.