Dutch-Bangla Bank PLC, a private bank in Bangladesh, plans to raise Tk 1,200 crore through the sale of subordinated bonds, according to a company disclosure posted on the Dhaka Stock Exchange yesterday.

The objective of this move is to increase the bank's capital in compliance with Basel-III, a global regulatory framework for improving the resilience of banking systems.

Subordinated bonds are a type of debt instrument that ranks below other financial liabilities in terms of repayment priority. They can come in the form of unsecured loans or bonds that have no collateral.

This means that if the issuer goes into liquidation or bankruptcy, subordinated bond holders will be paid back only after the owners of other, more senior bonds or securities get their dues.

Additionally, subordinated bonds are non-convertible.

The plan, subject to approval from Bangladesh Bank and the Bangladesh Securities and Exchange Commission, has already been cleared by the bank's board, the disclosure said.

Once issued, the bonds will mature in seven years, it added.

Shares of Dutch-Bangla Bank remained unchanged at Tk 59.10 yesterday.

Dutch-Bangla Bank has paid-up capital of Tk 747 crore while its net profit rose 3.5 percent to Tk 413 crore in the first nine months of 2023.

The bank's earnings per share stood at Tk 5.53 at the end of third quarter of the current year, according to its financial statements.