Sampath Bank to raise up to Rs. 50 b via Tier 2 debt in three years

Sampath Bank PLC plans to raise up to Rs. 50 billion through Basel III-compliant Tier 2 debt over a three-year period, the bank said.

The Board approved the issue of up to 500 million listed, rated, unsecured, subordinated, redeemable debentures, Green Bonds and/or Sustainability Bonds at a par value of Rs. 100 each at its meeting on 30 September.

The instruments will be issued in one or more tranches within three years of obtaining shareholder approval at an Extraordinary General Meeting (EGM), subject to clearance from the Colombo Stock Exchange (CSE) and other regulators.Tier 2 capital is a supplementary layer of a bank’s regulatory capital under the Basel III framework, which sets minimum capital requirements for banks. The instruments are subordinated, meaning holders rank behind depositors and senior creditors in the event of liquidation.

All instruments will carry a non-viability conversion feature. This allows them to be converted into ordinary shares if the regulator determines that the bank has reached the point of non-viability, enabling losses to be absorbed by investors rather than depositors or taxpayers.

The timing, structure, type of instrument, coupon rates, frequency of interest payments, and other terms of each issue will be disclosed before it opens, the bank said. Each issue will be launched subject to obtaining all necessary regulatory approvals and on terms acceptable to the bank.