Sampath Bank PLC has launched a Basel III-compliant Tier 2 Green Bond offering to raise up to Rs. 10 billion. The proceeds will strengthen the bank’s regulatory capital while financing environmentally sustainable projects, reinforcing its commitment to sustainable finance and supporting Sri Lanka’s transition toward a greener and more resilient economy.
Key Overview
- Sampath Bank plans to raise up to Rs. 10 billion through a green bond.
- The offering includes 5-year and 7-year Basel III-compliant Tier 2 bonds.
- Funds will strengthen the bank’s Tier 2 capital and finance eligible green projects.
- The issue has received approval in principle from the Colombo Stock Exchange.
- The bond supports the continued growth of Sri Lanka’s sustainable finance market.
Sampath Bank Opens Rs. 10 Billion Green Bond Offering
Sampath Bank PLC has announced the launch of a Basel III-compliant Tier 2 Green Bond issue, with subscriptions opening on July 17, after receiving approval in principle from the Colombo Stock Exchange (CSE).
The bank aims to raise up to Rs. 10 billion through the offering, with the proceeds intended to strengthen its regulatory capital position while financing environmentally sustainable projects under its green finance strategy.
The issuance reflects the increasing importance of sustainable finance within Sri Lanka’s banking sector, where financial institutions are integrating environmental objectives into their lending and capital-raising activities. It also demonstrates the growing demand among investors for financial products that generate both financial returns and positive environmental outcomes.
Bond Structure and Investor Options
The initial offering comprises 70 million green bonds, each with a face value of Rs. 100, targeting Rs. 7 billion in fundraising.
Should investor demand exceed the initial allocation, Sampath Bank has the option to issue an additional 30 million bonds, increasing the total fundraising to a maximum of Rs. 10 billion.
Investors will have the option of subscribing to one of two fixed-rate instruments:
- 5-year (2026–2031) Green Bond: 13.0% annual interest
- 7-year (2026–2033) Green Bond: 13.25% annual interest
Interest on both bond series will be paid annually, providing investors with predictable income while supporting the financing of environmentally sustainable projects.
The dual-maturity structure gives investors greater flexibility to select an investment horizon that aligns with their financial objectives while enabling the bank to diversify its long-term funding sources.
Strengthening Capital Under Basel III
The Green Bond has been structured as a Basel III-compliant Tier 2 Listed, Rated, Unsecured Subordinated Redeemable Green Bond featuring a Non-Viability Conversion clause.
Tier 2 capital instruments form an important part of a bank’s regulatory capital framework by providing an additional financial buffer capable of absorbing losses during periods of economic or financial stress. Strengthening Tier 2 capital improves a bank’s overall resilience, enhances its lending capacity and supports long-term financial stability.
The non-viability conversion feature is a key Basel III requirement for regulatory capital instruments. It allows the bonds to absorb losses should the bank reach a point of non-viability, thereby protecting depositors and contributing to the stability of the broader financial system.
Funding Environmentally Sustainable Projects
Alongside strengthening the bank’s capital base, the proceeds from the Green Bond will be directed toward financing eligible environmentally sustainable projects in line with Sampath Bank’s sustainable finance strategy.
While the bank has not disclosed the specific categories of projects to be financed, green bond proceeds are commonly allocated to initiatives such as renewable energy generation, energy-efficient buildings, sustainable transportation, clean water and wastewater management, pollution prevention and other climate-related investments.
By linking regulatory capital with green financing, Sampath Bank is supporting investments that contribute to environmental sustainability while expanding access to finance for businesses and projects advancing Sri Lanka’s low-carbon transition.
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Green Finance Gains Momentum in Sri Lanka
The issuance comes as sustainable finance continues to gain momentum across Sri Lanka and other emerging markets.
Banks are increasingly using green bonds and other sustainability-linked financing instruments to mobilize capital for projects that address climate change, improve environmental performance and support sustainable economic growth.
For investors, green bonds provide an opportunity to diversify their portfolios while supporting projects that deliver measurable environmental benefits. For financial institutions, these instruments create access to long-term funding while demonstrating alignment with global environmental, social and governance (ESG) standards.
As regulatory frameworks continue to evolve, sustainable finance is expected to become an increasingly important component of Sri Lanka’s financial sector development.
Issue Management and Listing
Capital Alliance Partners Limited has been appointed as the placement agent for the Green Bond issue, while Central Depository Systems (Pvt.) Ltd will act as the registrar.
The Colombo Stock Exchange’s approval in principle allows the bonds to be listed upon completion of all regulatory and issuance requirements, providing investors with access to a regulated and transparent investment instrument.
The listing also strengthens Sri Lanka’s capital markets by expanding the availability of sustainable investment products for institutional and retail investors.
Outlook
Sampath Bank’s Green Bond issuance highlights the growing convergence of financial resilience and sustainable finance within Sri Lanka’s banking sector. As regulatory frameworks continue evolving and investor demand for environmental, social and governance (ESG) investments increases, green bonds are expected to become an increasingly important source of long-term funding for banks and financial institutions.
By raising capital that simultaneously supports Basel III regulatory requirements and environmentally sustainable lending, Sampath Bank is strengthening its financial position while contributing to the country’s climate and development goals. The issuance is also expected to encourage greater participation from both domestic and international investors seeking sustainable investment opportunities in emerging markets.
As Sri Lanka continues expanding its sustainable finance ecosystem, similar green bond issuances could play a key role in mobilizing private capital for renewable energy, clean infrastructure, resource efficiency and other environmentally beneficial projects. This would not only deepen the country’s green capital market but also help accelerate the transition toward a more resilient, low-carbon and sustainable economy.
FAQs
1. How much is Sampath Bank aiming to raise?
The bank plans to raise up to Rs. 10 billion through its Basel III-compliant Tier 2 Green Bond offering.
2. What will the proceeds be used for?
The funds will strengthen Sampath Bank’s Tier 2 capital while financing eligible environmentally sustainable projects.
3. What interest rates are offered?
The five-year bond offers 13.0% annual interest, while the seven-year bond offers 13.25%, with interest paid annually.
4. Why is this Green Bond significant?
The issuance supports both the bank’s regulatory capital requirements and Sri Lanka’s growing sustainable finance market by directing investment toward environmentally responsible projects while strengthening the country’s green capital market.
Sources: Daily Mirror, Hiru News, Global CEO Magazine
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