United Commercial Bank PLC (UCB) has received approval to issue rights shares worth Tk775 crore to enhance its capital strength.
The initiative, approved by the Bangladesh Securities and Exchange Commission (BSEC), will increase the bank’s paid-up capital from Tk1,550 crore to Tk2,325 crore.
The primary objective of the move is to strengthen the bank’s capital base and enhance its capacity for future business expansion.
According to the approved proposal, existing shareholders of UCB will have the opportunity to purchase one new share against every two existing shares.
The issue price has been set at Tk10 per share, with no premium included.
Through this approach, the bank aims to raise capital while ensuring participation opportunities for its existing shareholders.
UCB’s initiative comes amid ongoing pressure from capital shortages in Bangladesh’s banking sector.
According to the Bangladesh Bank’s Financial Stability Report 2025, the average Capital to Risk-weighted Assets Ratio (CRAR) of the country’s banking sector fell to negative 2.64% at the end of last year.
Under the international Basel III framework, banks are required to maintain a minimum CRAR of 12.50%.
Currently, nearly two dozen banks in Bangladesh are facing capital shortfalls, with their combined deficit exceeding Tk280,000 crore.
The funds raised through UCB’s rights offer will be added to the bank’s Common Equity Tier-1 (CET-1) capital, which is considered the most important component of a bank’s capital base.
This capital is regarded as the strongest indicator for assessing a bank’s financial stability.
At the end of 2025, UCB’s standalone Capital to Risk-weighted Assets Ratio (CRAR) stood at 8.42%, which was below the required 12.50% level, including the Basel III conservation buffer.
The bank expects that the addition of fresh capital will help reduce this gap.
Meanwhile, UCB is also proceeding with the issuance of Tk800 crore in subordinated bonds, which will further support the strengthening of its capital structure.
In recent times, rising non-performing loans (NPLs) and provisioning shortfalls have emerged as major challenges for the banking sector.
According to UCB’s disclosed data, the bank’s non-performing loan ratio stands at 15.50%, while its provisioning shortfall amounts to Tk5,595 crore.
The pressure on asset quality in the banking sector since 2024 has also affected UCB’s financial indicators.
However, the bank has chosen capital enhancement as a key measure to address these challenges.
UCB officials believe that the additional capital will improve the bank’s future lending capacity and enable more effective utilization of deposit resources. In 2025, the bank’s deposits increased by 23% to Tk68,394 crore.
A stronger capital structure could also have a positive impact on UCB’s international operations.
In particular, it is expected to support the maintenance and expansion of relationships with foreign correspondent banks.
Additionally, an improvement in the bank’s credit rating in the future could help reduce the cost of raising funds.
An improved capital position is also expected to enhance the bank’s ability to pay dividends in the future.
Under Bangladesh Bank regulations, banks with high levels of non-performing loans or provisioning shortfalls face restrictions on dividend distribution.
The rights offer is also considered significant for shareholders.
Although UCB’s audited Net Asset Value (NAV) per share stands at Tk27.12, the new shares will be issued at Tk10 each.
The difference between the NAV and the issue price may be viewed as an attractive factor for existing shareholders.
Commenting on the matter, UCB deputy managing director (DMD) Faruk Ahammad said: “The implementation of the rights offer will strengthen the bank’s capital base, enhance market confidence, and create new opportunities for UCB’s long-term business growth.”