NDB to raise Rs.6.2bn through rights issue

National Development Bank PLC (NDB) on Tuesday conveyed its plans to the Colombo bourse to raise Rs.6.2 billion via a rights issue.

Accordingly, the bank plans to issue 59.1 million new shares in the proportion of one new ordinary voting share for every three ordinary voting shares held, at a price of Rs.105 per share.

The NDB share on Tuesday closed at Rs.132.70. As at March 31, 2018, the book value stood at Rs.189.32. NDB’s current stated capital stands at Rs.3.01 billion, represented by 177.5 million shares.

The bank said the rights issue proceeds would be utilized to further strengthen its equity base and thereby its capital adequacy and to part finance the growth in the loan portfolio.

As at March 31, 2018, NDB’s BASEL III-compliant Tier I capital ratio stood at 8.73 percent, whereas the regulatory minimum is 7.875 percent.  The Tier II ratio stood at 13.35 percent, against the regulatory minimum of 11.875 percent.  The regulatory minimums of both ratios go up to 8.5 percent and 12.5 percent by January 1, 2019, when the BASEL III comes into full effect.  The government holds over a 30 percent stake in NDB through various state-controlled entities.  As at March 31, the controversial Perpetual group held a 6.52 percent stake in NDB.

Sri Lanka’s large banks have raised Rs.42 billion in equity and Rs.11 billion in debt to stay compliant with the BASEL III thresholds that are in effect from January 1, 2018.