Bank Makramah Ltd. has announced plans to issue 27.8 million shares to holders of its Term Finance Certificates (TFCs) as part of a capital strengthening initiative aimed at reinforcing its Tier 1 capital base. The development was disclosed in a filing submitted to the Pakistan Stock Exchange (PSX) on Thursday, signaling a significant move in the bank’s ongoing efforts to meet regulatory capital adequacy requirements.
The share issuance follows formal consent obtained from TFC holders and builds on a material information disclosure previously made by the bank on January 26, 2026. The transaction is structured to cover a total outstanding amount of Rs 3.35 billion, which will be adjusted for applicable taxes. By converting this obligation into equity, the bank intends to improve its core capital position and align itself more closely with prudential regulatory standards.
Tier 1 capital represents a bank’s core equity capital and disclosed reserves, serving as the primary buffer against financial stress. Strengthening this layer of capital is essential for maintaining compliance with regulatory frameworks and sustaining operational stability. For Bank Makramah Ltd., the issuance of new shares in favor of TFC holders reflects a strategic step to bolster its capital structure without relying solely on external fundraising avenues.
The issuance remains subject to regulatory clearance and shareholder approval. These approvals are required to ensure compliance with prevailing corporate governance and securities regulations. According to the bank’s filing, the shares will be issued in accordance with Section 96 of the Securities Act, 2015, as well as Clause 5.6.1(a) of the PSX Rule Book. Adhering to these provisions underscores the bank’s intent to execute the transaction within the established legal and regulatory framework governing listed entities in Pakistan.
The decision to convert TFC liabilities into equity also reflects a broader trend within Pakistan’s banking sector, where institutions are exploring balance sheet optimization measures to address capital constraints. Term Finance Certificates are commonly used as debt instruments by financial institutions to raise medium- to long-term funding. However, converting such instruments into equity can improve capital adequacy ratios and reduce leverage pressures.
In its communication, Bank Makramah Ltd. directed that the information be shared with the TRE certificate holders of the Pakistan Stock Exchange, ensuring transparency and alignment with market disclosure requirements. Such notifications are a key component of maintaining investor confidence and ensuring that market participants are informed of material developments that may influence the bank’s financial profile.
The move comes at a time when regulatory scrutiny around capital buffers and risk-weighted assets remains firm across the financial sector. Strengthening Tier 1 capital enhances a bank’s ability to absorb unexpected losses while continuing to support lending and operational activities. For Bank Makramah Ltd., this issuance represents a structural adjustment designed to secure its financial standing and reinforce compliance with capital adequacy benchmarks.
As the bank proceeds toward securing the necessary approvals, the proposed issuance will remain closely watched by investors and regulators alike. If completed as planned, the transaction will mark a pivotal milestone in the institution’s capital management strategy and long-term stability roadmap.
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