Capital Boost

Mar 06, 2012 (LBO) – Sri Lanka’s listed Sampath Bank is planning to issue subordinated debt to boost its regulatory capital by at least 5.0 billion rupees during the second quarter of 2012, chief executive Aravinda Perera said. At standalone bank level Sampath made profits of 3.81 billion rupees in 2011 up 15.6 percent from a year earlier. Group profits rose 19.1 percent to 4.1 billion rupees.

“We are looking at both rupee and dollar (denominated instruments),” Perera said.

By December 2011 the bank had Tier I capital of 10.24 percent (16.59 billion rupees) and total capital adequacy of 11.45 percent of risk weighted assets (18.5 billion rupees).

The Central Bank has asked banks to limit credit growth to 18 percent from domestically funded assets and 23 percent if the balance can be raised abroad. Sampath has already raised 62.5 million US dollars from a syndicated loan.

Perera said Tier II capital at only a little over one percent gave the bank room to boost it.

The exact quantum of funding will be decided based on market appetite at the time of the sale but the bank was looking at minimum of 5.0 billion rupees, Perera said.

The mix between dollar and rupee denominated bonds will be decided on th