Published : Oct. 23, 2020 - 14:17
(Yonhap)
Major South Korean lender Shinhan Bank said Friday it will issue 200 billion won ($176 million) worth of hybrid bonds in November to bolster its financial health.
The envisioned debt sale will be conducted on Nov. 5 and the amount could rise to 300 billion won depending on the outcome of next week's demand forecasting, the lender said.
Hybrid bonds, which combine both debt and equity features, help a bank raise its capital ratio. A call option gives the issuer the right of termination before maturity.
The bond flotation comes as the lender's so-called capital adequacy ratio declined in the first half due to a rise in risk-weighted assets stemming from increased loans to coronavirus-hit companies.
"The proceeds will be used to extend loans and invest in securities," a bank official said. "Our asset portfolio management plan may hinge on future market conditions."
The capital adequacy ratio of Shinhan Bank, the flagship of major banking group Shinhan Financial Group Co., decreased to 15.49 percent as of the end of June from 15.91 percent six months earlier.
A key barometer of financial soundness, the ratio refers to the proportion of a bank's capital to its risk-weighted assets. The Switzerland-based Bank for International Settlements (BIS), an international body of central banks, advises lenders to keep a ratio of 8 percent or higher. (Yonhap)