Analyst
Wajeeha Asghar
wajeeha.asghar@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
PACRA Withdraws Rating of The Bank of Punjab | TFC I | Dec-16 upon Exercise of Call Option
Issuer | The Bank of Punjab |
Instrument | TFC-I |
Amount | PKR 2500 mln |
Issuance Date | 23-Dec-16 |
Tenor | 10 Years |
Redemption Date | 09-Mar-23 |
Outstanding Amount | - |
Rating Type | Debt Instrument | |
Current (13-Jun-23 ) |
Previous (24-Jun-22 ) |
|
Action | Redeem | Maintain |
Long Term | - | AA |
Short Term | - | - |
Outlook | Stable | |
Rating Watch | - | - |
The Bank of Punjab ("BOP" or the "Bank") on 9th Mar'23 exercised the call option on The Bank of Punjab | TFC | Dec-16. The TFC amounting to PKR 2.5bln was issued in Dec'16. The TFC was privately placed, rated, unsecured, and subordinated as to the payments of principal and profit to all other indebtedness of the Bank, including deposits. The amount raised through this Issue contributed towards BOP’s Tier II Capital in accordance with SBP guidelines on capital adequacy.
Under the notice, for the call option, the Bank redeemed in full the entire principal amount of PKR 2.5bln along with the profit payment accrued thereon.
Subsequent to the redemption of the Term Finance Certificate, the Pakistan Credit Rating Agency (PACRA) has withdrawn the rating of The Bank of Punjab | TFC I | Dec-16
About
the Entity
The Bank of Punjab, established under the BOP Act 1989, is listed on Pakistan Stock Exchange (PSX). The Government of Punjab (GoPb) holds majority stake in BOP (57%), whereas the rest is widely dispersed. The bank’s President & CEO – Mr. Zafar Masud was appointed as President &
CEO by the GoPb on 17th March, 2020 and assumed the charge on 16th April, 2020. The senior management consists of seasoned bankers. The current team has played a pivotal role in the bank's revival; their continuity and cohesiveness is critical for successful execution of the envisaged business plan.
About
the Instrument
BOP issued its first unsecured, subordinated and privately placed TFC of PKR 2.5bln in Dec 2016. The amount raised contributed towards BOP’s Tier II Capital in accordance with SBP guidelines on capital adequacy. Furthermore, the amount raised was utilized in BOPs’s normal business operations as permitted under Bank of Punjab Act 1989. The profit was paid semi-annually in arrears at the rate of 6MK+100bps on the outstanding amount. Total of 0.24% of the principal was redeemed in the first 6 years and 2.5 months of the tenor through semiannual payments and the remaining principal of 99.76% on 9th Mar'23 when the call option is exercised. The instrument was subject to lock in clause, loss absorbency and/or any other requirements under SBP’s Basel III Capital Regulations. Call option was exercisable on and after five years of the issue date.