Tbilisi (GBC) - Silk Bank announces the issue of 10 million USD bonds with a maturity of 5 years (denomination: $100,000). The benchmark rate of subordinated securities is within the range of 11.5%-12.5%. Placement agent is "Alpha Capital Advisory".

The main reason for the offer is to optimize the bank's capital structure. Accordingly, the reason is to meet the demand of the National Bank of Georgia (NBG) and keep in line with the capital adequacy (growth/maintenance) ratio.

In addition, the bank has announced digital transformation. The bank will fully digitize most of the products and services. In the future, the main channels of receiving services is also considered to be digital.

The bank has been working on the digital platform since Q1/2023. According to the management, it will be available for certain customer segments in Q2/2024.

At the moment, alternative channels for offering and selling the product are already active (including website, various social platforms and sms...).

According to the management of Silk Bank, its capital increased by 9.8 million GEL in Q4/2023, with the issue of 98,000 shares.

As of the issue of prospectus, the bank has been making losses for 6 years. The management associates the loss-making operation in recent years with the withdrawal of BTA Bank (Kazakhstan) from the shareholders' structure.

If it is not able to generate profits in the coming years, there is a risk that the supervisory capital will fall below the NBG minimum. In case of repeated losses, the issuer will be forced to raise more capital to meet regulatory capital requirements.