KARACHI (December 18 2002) : The public subscription in Union Bank's Terms Finance Certificates worth Rs 750 million will be opened from December 19 to December 21.
Out of the total size of Rs 750 million, Rs 150 million will be offered to general public. The Bank was incorporated in the early 90s, was taken over by a new management in the mid of 1999 and is, since then, grown at an accelerate pace and has earned substantial profits.
During the nine months period of the year 2002, the net interest income of the Bank has grown by 109 percent while the profitability has improved by 136 percent to Rs 15.12 million.
The tenor of this issue is five and half years and the rate of profit is base (meaning the last cut-off yield on the successful auction of five-year Pakistan Investment Bonds) plus 2.25 percent. The floor rate is 11 percent and the cap is 15.50 percent.
Iffat Zehra, Head of research at IP Securities, said that as per the central bank's policy of strengthening financial institutions, the financial sector reform package includes the mandatory requirement for banks to increase their capital base to Rs 1 billion.
She said that this provision has induced the banks to either issue right shares or raise capital through offering TFCs. Union Bank has complied with the SBP's minimum capital requirement well ahead of the prescribed time limit, however, for the purpose of financing the bank's business operation is now set to issue Rs 1.5 billion TFC.