Seylan Bank is raising over a billion rupees in debt, to meet its capital adequacy requirements.
The bank said a billion rupees will be raised through a five-year debenture, with the option of raising a further Rs. 500 mn in the event of an oversubscription.rn
rnThe issue carries a monthly fixed rate of 9 percent, 10 percent payable annually or a floating rate of two percent above the one year treasury bill. One-year treasury bills are currently trading at around 7 percent in the secondary market. rn
rnThe floating rate issue comes with a floor of 6 percent and a cap of 12 percent.rn
rnThe banks five-year Rs. 600 mn debenture issued in 1998, also comes up for redemption this year. The new issue allows debenture holders to re-invest their funds.rn
rnThe latest fund raising exercise comes after Seylan raised Rs. 1 bn through a non-voting share issue recently.rn
rnStarting June, the Central Bank requires all commercial banks to allocate 50 percent of the foreign currency banking assets for capital adequacy. rn
rnThe limit will be raised to 100 percent starting next January. Commercial Banks capital adequacy ratio will also be raised to 10 percent next year.rn