Samba Bank Limited (PSX:SBL) has issued a formal notice to holders of its rated, subordinated, and unsecured Tier-II term finance certificates worth Rs 5 billion, announcing its decision to exercise the call option in full. The bank confirmed that the exercise of the call option is part of a planned financial strategy to redeem the outstanding TFCs and provide returns to investors according to the pre-agreed terms.
The TFC issue was originally executed on February 24, 2021, under an agreement between Samba Bank and Pak Oman Investment Company Limited, acting as the issue agent. This structured financing instrument was designed to strengthen the bank’s capital base, providing Tier-II capital under regulatory frameworks while offering investors predictable returns over a five-year horizon.
The board of directors of Samba Bank approved the call option exercise during its meeting on October 20, 2025. The exercise received regulatory clearance from the State Bank of Pakistan on January 2, 2026, ensuring compliance with central banking and capital adequacy requirements. Additionally, an extraordinary resolution was passed by the requisite majority of TFC holders, formally authorizing the bank to proceed with the call option redemption.
The redemption date for the option has been set for March 2, 2026, which is the next working day following March 1, 2026, a public holiday. On this date, Samba Bank will redeem the entire principal outstanding of approximately Rs 4.991 billion, along with accrued profit calculated up to the call option date. The redemption amount will be subject to deductions for Zakat and applicable taxes as mandated by law, ensuring regulatory compliance for both the bank and investors.
To determine entitlements under the call option, Samba Bank has announced that the transfer books for the TFC issue will remain closed from February 20, 2026, to February 27, 2026, inclusive. Transfers received by FAMCO Share Registration Services (Pvt.) Limited by the close of business on February 19, 2026, will be considered for eligibility under the call option. This measure ensures an orderly settlement process and clarity regarding investor entitlements.
This redemption marks a significant milestone for Samba Bank in managing its capital structure and meeting investor obligations efficiently. By exercising the call option, the bank is demonstrating proactive management of its subordinated debt portfolio while maintaining alignment with regulatory and corporate governance standards.
Market analysts note that such exercises are part of standard financial practice for banks with Tier-II instruments, as they allow institutions to optimize capital costs, improve balance sheet metrics, and provide liquidity to investors in a structured manner. The strategic use of call options also reflects Samba Bank’s ongoing commitment to maintaining investor confidence while managing its financial instruments prudently.
The successful redemption of these Tier-II TFCs is expected to strengthen Samba Bank’s financial profile ahead of future capital requirements, while maintaining transparency and regulatory compliance in line with the directives of the State Bank of Pakistan. Investors and stakeholders can anticipate timely settlement and the continuation of Samba Bank’s disciplined approach to capital management.
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