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Nations Trust Bank will go for a rights issue of Rs. 35 million which has been approved by the Board of Directors shortly, a bank spokesman said yesterday.

"We have submitted an application to the Colombo Stock Exchange in this regard. Shareholders will receive the right to purchase seven new ordinary shares, at a price of Rs. 13 per share, for every ten existing shares held," he said.

The Bank has a paid-up equity of Rs. 540 million and a net worth of Rs. 737 million (as of March 31, 2003). The bank has core capital of Rs. 584 million and a total capital base capital of Rs. 638 million. This works out to 10.1 per cent of the bank's risk-weighted assets. The proceeds of the rights issue will increase the core capital of Nations Trust Bank from the current level to approximately Rs. 1 billion and base capital to Rs. 1.1 billion. Subsequent to the rights issue, the bank's capital adequacy ratio is projected to increase to 16.8 per cent.

Nations Trust Bank has been making rapid inroads into the banking sector with new and innovative products and services and gaining increasing recognition since its inception in 1999. The bank has now reached its maximum potential and needs to recapitalise to rise to the next level. The new level of capital will enable the bank to continue along its projected plans for rapid growth in the next few years. The capital infusion has been in the pipeline since the end of last year and the Board was awaiting the appropriate time to approach its shareholders for the new equity, the spokesman said.

The bank has performed extremely well during the first quarter of the current year with the total business turnover growing to Rs. 548 million compared to Rs. 167 million in the first quarter of 2002. Deposits have reached Rs. 5.3 billion and with the acquisition of Waldock Mackenzie in 2002, the asset base has increased to Rs. 16.6 billion. The steady growth in business volumes has yielded a net profit for the quarter of Rs 83.4 million. The fixed income trading and sales activities of the group made a significant contribution to the results of the first quarter.

Nations Trust has expanded its delivery points to a total of 21 branches and service counters.

The bank operates on a central processing basis and the bank has made considerable investments on state of the art IT systems. Going forward the bank will be able to manage significant growth using the same infrastructure thereby optimising its investments.

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