Southeast Bank today announced its plan to raise Tk 1,000 crore through issuing a bond to strengthen its capital base.

The board of the private bank approved the issuance of the subordinated bond, that is paid back after other bonds in case of financial difficulty of the  issuer.

The bond which will be fully redeemable, non-convertible, unsecured is planned to strengthen the Tier-II capital of Southeast Bank, according to a disclosure on the Dhaka Stock Exchange (DSE) today.  

Shares of the bank was unchanged at Tk 8.80 in mid-day trading on the DSE. 

Tier-II is designated as the second or supplementary layer of a bank's capital and is composed of items such as revaluation reserves, hybrid instruments, and subordinated term debt.

A fully redeemable, non-convertible, unsecured, floating rate subordinated bond is a debt instrument that must be repaid in full upon maturity, cannot be converted into equity, is not backed by collateral, and carries a variable interest rate. 

The private bank Initially planned to issue bond of Tk 500 crore. Later it decided to double the issue size considering its future capital requirements. 

The bond, the bank's sixth such issuance, will have a seven-year tenure and will enhance its total regulatory capital.  

Southeast Bank said the issuance is subject to approval from the relevant regulatory authorities.