Samba Bank Limited (PSX: SBL) has formally notified holders of its rated, subordinated and unsecured Tier-II term finance certificates (TFCs) amounting to Rs5 billion that it will exercise its call option in full, initiating the early redemption of the capital instrument. The move marks a significant capital management step for the bank and follows a series of regulatory and stakeholder approvals.
The TFC issue was originally executed on February 24, 2021, under an agreement between Samba Bank Limited and Pak Oman Investment Company Limited, which acted as the issue agent. The instrument was structured as a Tier-II capital facility, forming part of the bank’s regulatory capital framework in accordance with applicable prudential requirements.
The decision to exercise the call option was approved by the bank’s board of directors at its meeting held on October 20, 2025. Following board approval, the bank sought and obtained the required regulatory clearance from the State Bank of Pakistan (SBP), which granted its approval on January 2, 2026. The regulatory nod paved the way for the formal execution of the redemption plan.
In addition to internal and regulatory approvals, the bank secured consent from the certificate holders. An extraordinary resolution was duly passed by the requisite majority of TFC holders in favor of exercising the call option. This step ensures compliance with the terms and conditions governing the instrument and reflects alignment between the issuer and investors regarding the early redemption.
Samba Bank has set March 2, 2026 as the call option redemption date. The date has been determined as the next working day after March 1, 2026, which falls on a public holiday. On the redemption date, the bank will redeem in full the entire principal outstanding amount of Rs4,991,000,000, approximately Rs4.99bn, along with accrued profit calculated up to the redemption date. Payments will be made after deduction of Zakat and tax at source in accordance with applicable laws.
For the purpose of determining entitlement under the call option, the bank has announced the closure of transfer books related to the TFC issue from February 20, 2026 to February 27, 2026, both days inclusive. During this period, transfers of certificates will not be processed. Transfers received by FAMCO Share Registration Services (Pvt.) Limited at the close of business on February 19, 2026 will be considered eligible for entitlement under the call option exercise.
The redemption of the Tier-II instrument is expected to have implications for the bank’s capital structure, as such subordinated debt instruments are typically counted toward supplementary capital under regulatory guidelines. The early retirement of the TFCs suggests a recalibration of funding costs and capital optimization in line with prevailing market conditions and the bank’s broader balance sheet strategy.
With all necessary approvals in place and procedural requirements completed, Samba Bank’s call option exercise concludes the five-year lifecycle of the Tier-II instrument originally issued in 2021. The redemption on March 2, 2026 will formally extinguish the outstanding principal and accrued profit obligations associated with the Rs5bn TFC issue.
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