UCB gets BSEC approval for Tk775cr rights offer

The Bangladesh Securities and Exchange Commission has approved United Commercial Bank PLC's plan to raise Tk775 crore through a rights share issuance, aiming to bolster its capital base and drive business growth amid mounting sectoral challenges.

This capital-raising move will increase United Commercial Bank PLC's paid-up capital from Tk1,550 crore to Tk2,325 crore.

Existing shareholders are entitled to acquire one new share for every two shares held, at an issue price of Tk10 per share without any premium.

The bank noted that the rights issue comes as Bangladesh's banking sector faces sustained capital pressure.

According to the Bangladesh Bank Financial Stability Report 2025, the country's banking sector saw its average capital-to-risk-weighted assets ratio fall to-2.64% at the end of last year, well below the Basel III minimum requirement of 12.50%.

Nearly two dozen Bangladeshi banks are currently grappling with capital shortfalls, with a combined deficit exceeding Tk2.8 lakh crore, according to the press release.

Proceeds from the rights offer will be injected into United Commercial Bank PLC's common equity tier-1 capital, a core element of financial stability and strength.

At the end of 2025, United Commercial Bank PLC's standalone capital to risk-weighted assets ratio stood at 8.42%, falling short of the required 12.50% threshold, including the Basel III conservation buffer.

The bank expects the fresh capital to help bridge the gap. It is also moving ahead with plans to issue Tk800 crore in subordinated bonds to further reinforce its capital structure.

Rising non-performing loans and provisioning shortfalls remain major headwinds for the banking sector.

United Commercial Bank PLC's latest disclosures show a non-performing loan ratio of 15.50%, with a provisioning shortfall of Tk5,595 crore.

The bank acknowledged that sector-wide pressure on asset quality since 2024 has adversely impacted its financial indicators.

To address these challenges, United Commercial Bank PLC has prioritised capital enhancement, with officials stating that the additional funds will support future lending capacity and more efficient utilisation of deposits.

In 2025, the bank's deposits grew 23% to Tk68,394 crore.

A stronger capital base is also expected to support United Commercial Bank PLC's international operations, including maintaining and expanding relationships with foreign correspondent banks. An improved credit rating could help lower future funding costs.

The bank's improved capital position may also increase its ability to pay dividends in future, though Bangladesh Bank regulations restrict dividend payments by banks with elevated non-performing loans or provisioning shortfalls.

The rights offer is also significant for shareholders. While United Commercial Bank PLC's audited net asset value per share stands at Tk27.12, new shares will be issued at Tk10 each.

Deputy Managing Director Faruk Ahammad of United Commercial Bank PLC said, "The implementation of the rights offer will strengthen the bank's capital base, enhance market confidence and create new opportunities for United Commercial Bank PLC's long-term business growth."