Jamuna Bank plans to float zero coupon bonds worth Tk 2.0 billion to ostensibly raise its capital base and help implement its credit expansion plan.
The bank wants to take its total loan disbursement to the level of Tk 50 billion in 2010. Until June, 2010, the bank disbursed approximately Tk 40 billion.
"We are expanding our credit base as market has returned back to normal," said Motiur Rahman, managing director of the bank.
The bank has already formulated a strategy to strengthen its capital base to avoid any untoward situation in the future, Mr Motior said.
"We will expand the capital base to meet the Bangladesh bank requirement upto 2014," he said.
A zero-coupon bond is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity. It does not make periodic interest payments.
The coupon or discount rate of the bond is 8.5 per cent and it will be redeemed after two to six years of floatation, the managing director said.
Each bond will have a face value of Tk 1,000 and five bonds will make a lot and 20 per cent of the bond will be convertible to share, he explained.
If a bondholder has five bonds, he will have shares worth Tk 1,000 or 20 per cent of its total holdings, Mr Motior said.
"We expect to float the bond by this year subject to permission of the regulatory authorities," he said.
The bank has a paid up of Tk 2.23 billion and its total capital size was Tk 4.46 billion in June. The bank has set a profit target of Tk 2.75 billion this year.
The Tk 10-share of the bank closed at Tk 57 on Thursday on the Dhaka Stock Exchange (DSE).
Source: http://thefinancialexpress-bd.com
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