First issuance of Basel III-complaint AT1CS done

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KUALA LUMPUR: Malayan Banking Bhd (Maybank) has completed its first issuance of Basel III-compliant AT1CS of RM3.5 billion in nominal value.

The issuance is pursuant to the AT1CS programme of up to RM10 billion and/or its foreign currency equivalent in nominal value.

As of yesterday, the AT1CS issuance is the first Basel III-compliant Tier 1 issuance in Malaysia.

The AT1CS issuance is perpetual non-callable with a 5.3% coupon rate, and has a tenure of five years. The first call date is on Sept 10, 2019, and thereafter on every coupon payment date.

Maybank said the AT1CS issuance will qualify as additional Tier 1 capital of Maybank, for the purpose of Bank Negara Malaysia’s capital adequacy framework (capital components) issued on Nov 28, 2012.

The proceeds from the issuance of the AT1CS will be utilised to fund Maybank’s working capital, general banking and other corporate purposes, including the refinancing of any borrowings incurred and/or any debt instruments issued by Maybank and/or relating thereto.

“In addition, we are also pleased to announce that Maybank has completed a partial redemption of RM3.437 billion in nominal value of its existing non-innovative tier 1 (NIT1) Capital, on Sept 10,” it said, adding that the NIT1 Capital was issued in June 2008.

The NIT1 Capital comprises non-cumulative perpetual capital securities issued by Maybank, which are stapled to subordinated notes issued by Cekap Mentari Bhd — Maybank’s wholly-owned subsidiary.

Since Jan 1, 2013, the NIT1 Capital has been gradually phased out, pursuant to the transitional arrangements under the BNM capital adequacy framework.

“The partial redemption of the NIT1 Capital and issuance of the AT1CS, therefore limit the amortisation impact of NIT1 Capital that is being phased out, alleviate inefficiency in the capital structure, optimise capital cost and enhance the regulatory capital base of Maybank,” it added.

This article first appeared in The Edge Financial Daily, on September 11, 2014.