Askari Bank Limited has received the State Bank of Pakistan’s approval to proceed with the full buyback of its Rs6 billion Rated, Subordinated, and Unsecured Tier II Term Finance Certificates (TFCs). The central bank granted this approval through a letter dated July 7, 2025, paving the way for Askari Bank to exercise its Call Option under the terms set out in the original trust arrangements.
The TFCs in question were issued under a Trust Deed executed on December 24, 2019, between Askari Bank, acting as the issuer, and Pak Oman Investment Company Limited, which serves as the trustee. This issuance formed part of the bank’s capital structure, designed to bolster its Tier II capital in line with regulatory requirements and support the institution’s long-term growth objectives.
Askari Bank’s decision to move ahead with the buyback was earlier endorsed by its Board of Directors during a meeting held on April 29, 2025. This resolution aligns with Clause 3.12 of the Trust Deed and Clause 27 of the detailed Terms and Conditions outlined in Schedule 2 of the Deed. Through this mechanism, the bank is effectively utilizing its contractual right to redeem the debt instruments ahead of maturity.
The bank will now proceed to fulfill all procedural and statutory obligations related to the exercise of this Call Option. As part of this process, formal notices will be issued to both the trustee and TFC holders, ensuring transparency and compliance with the provisions of the Trust Deed. These communications will detail the timelines and technical modalities for the buyback, providing clarity to stakeholders involved.
This strategic move comes at a time when banks in Pakistan are carefully managing their capital structures to navigate an evolving financial landscape. By retiring these TFCs, Askari Bank aims to optimize its balance sheet and potentially reduce future interest expenses tied to these subordinated instruments. The buyback could also support the bank in recalibrating its capital adequacy ratios in preparation for future regulatory or business requirements.
Market observers note that such corporate actions can have positive signals for investors, indicating confidence in the institution’s liquidity position and overall financial health. The proactive decision to redeem the TFCs also underscores Askari Bank’s commitment to maintaining a robust capital framework, essential for sustaining lending operations and meeting the needs of corporate and retail customers.
The move follows a series of strategic initiatives by local banks to align their capital instruments with evolving market conditions and regulatory benchmarks. As interest rate environments shift and economic conditions continue to challenge traditional banking models, capital optimization through instruments like TFCs remains a key lever for financial institutions.
Askari Bank, listed on the Pakistan Stock Exchange under the ticker AKBL, continues to engage actively with the market and regulatory bodies to reinforce its position within the country’s banking sector. This latest development is expected to enhance its capital flexibility and may contribute to increased investor confidence in its long-term strategic direction. With the SBP’s formal consent now secured, the bank is set to move ahead with implementing this buyback, further consolidating its financial stability and readiness for future growth opportunities.