Sampath Bank closes debenture issue at Rs. 1.5 b

Sampath Bank Plc on Friday closed the unsecured subordinated redeemable five-year listed debenture issue after raising Rs. 1.5 billion.

The issue had an option to raise a further Rs. 1 billion making its full value to Rs. 2.5 billion (25 million debentures at Rs. 100 each).

The debenture issue officially opened on Thursday 4 October but was oversubscribed only on Friday.

Investors had several options in terms of returns. Type A  was a fixed rate of Fifteen per centum (15.00%) per annum on the  par value, payable monthly with an Annual Effective Rate of  16.08% , payable monthly  within three market days from the end of each month.

Type B was A fixed rate of Sixteen point Five per centum (16.50%) per annum on the par value payable annually with an Annual Effective Rate of 16.50% commencing at the expiry of every one-year period from the date of allotment of Debentures payable within three market days from the end of each year.

Type C was a Floating Interest Rate equivalent to the six months Gross Treasury Bill rate as published by the Central Bank of Sri Lanka immediately prior to the commencement of each interest period plus two per centum payable semi-annually within three market days from the end of every six months, from the date of allotment until the date of redemption. (Present gross at 14.58% + 2.00% = 16.58%).

Minimum subscription was Rs. 10,000.

Sampath Bank launched the debenture issues to expand and strengthen the capital base of the bank in keeping with its expansion and to maintain the capital adequacy requirements as stipulated by CBSL.

The issue was also aimed reinforcing the bank’s Tier II capital and facilitate future expansion of operations and the asset base.

Among other objectives were to mobilise/raise medium term funds to match the medium to long-term lending of the bank and to minimise the mismatch in funding exposure and to minimise the interest rate risk and the gap exposure in the bank’s assets/liabilities portfolio.

Currently there are 24 commercial banks competing for the banking business in Sri Lanka. Sampath Bank is estimated to hold 6.27% of deposits and 7.0% of loans and advances share of the market as at first quarter 2012. It is also ranked among the top three private sector commercial banks in the country.

Sampath Bank continued with its accelerated branch expansion program, with the opening of 35 new branches throughout the country in 2011, thus becoming the bank to have opened the highest number of new branches for the third consecutive year.

Consequent to this expansion drive, the bank achieved wide network of 209 branches by the end of 1Q 2012. Further, Sampath Bank operates the largest ATM network in the island interconnecting over 1,600 ATMs of its owned and other financial institutions.

Sampath Bank will continue to remain competitive in the market, in terms of superior customer service levels with its highly motivated team members, and new technological innovations designed to offer even more convenience to its customers along with a strategically designed marketing campaign to promote business growth.