Sampath Bank in fresh Rs.12.1bn shareholder cash call

Sampath Bank PLC has announced plans to raise Rs.12.1 billion in a seven for 23 rights issue, as the lender attempts to bolster its core capital, barely a year after it raised a similar amount in a rights issue.   

The call for fresh cash also comes roughly after two weeks it raised Rs.7 billion via a subordinated debenture issue.

In a stock exchange filing, Sampath Bank said its directors approved a proposal to issue a total of 89 million new shares, post the scrip dividend— dividends issued in the form of shares in lieu of cash— at a price of Rs.136 a share.       

     
The Sampath Bank share ended trading at Rs.195.70 last week, after losing Rs.36.20 or 15.61 percent in value on Friday. The bank is expected to place the resolution of the proposed rights issue for the shareholder approval at the annual general meeting scheduled for March 29. 

Sampath Bank raised Rs.12.5 billion in April, last year, in a rights issue as a pre-emptive strategy to increase its core capital and to propel lending activities.
The bank gave Rs.100 billion in loans in 2018, registering a 17 percent growth in the loan book.

However, the lender reported subdued financial performance during the financial year ended December 31, 2018, on hefty provisions against the possible bad loans and partly due to the first time impact from the change in the provisioning method under the new accounting standard. 

The bank reported earnings of Rs.46.85 a share or Rs.12.6 billion in total earnings for the year ended December 31, 2018, barely changed from 2017.

Sampath Bank announced a first and final dividend of Rs.16.25 a share or Rs.4.56 billion in total, consisting of Rs.5.00 of cash and the balance as scrip dividend as the bank wanted to retain as much profits as possible to beef up its Tier I capital base, which has risen to 10 percent of total risk weighted assets or loans of the bank from January 1, 2019. 

Sampath Bank raised a total of Rs.33 billion in both Tier I and Tier II capital since the final quarter of 2017 through 2018, to stay above the rising capital adequacy requirements under BASEL III. 

The billionaire businessman Dhammika Perera-controlled Vallibel One PLC has a 14.95 percent stake in the bank being its largest shareholder.