Land and Houses Bank (LH Bank) plans to issue Basel III-compliant tier-2 debentures worth 4 billion baht in May to raise funds to finance an expansion over the next three years.
The 10-year subordinated debentures will be earmarked for both institutional and high-net-worth investors.
The coupon rates of the hybrid securities are expected to be 5% and 5.25%, based on the credit ratings of the bank and the debentures of A- and BBB, respectively, and interest will be payable quarterly.
The timing is right for the bank to offer such bonds, which provide an alternative investment vehicle in a low-interest environment, president Sasitorn Phongsathorn said.
LH Bank will be the country's first small bank to mobilise funds by issuing the subordinated notes.
Last year, several Thai banks sold hybrid securities in both local and foreign currencies to shore up Tier-2 capital.
Krungthai Bank offered a US$700-million Basel III instrument, while CIMB Thai Bank issued subordinated debt worth 2 billion ringgit (17.8 billion baht).
Ms Sasitorn said the planned issuance of subordinated notes would strengthen LH Bank's capital adequacy ratio to 15% from 12% now.
In another development, the small bank aims for 10-15% growth in total assets this year from 165 billion baht at the end of 2014.
Of total assets last year, 75% were loans and 25% were corporate bond investments.
"We have more opportunities to grow aggressively in terms of both assets and loans when compared with large banks because of our smaller portfolio," Ms Sasitorn said. "At the same time, the bank can control asset quality at a satisfactory level."
LH Bank's non-performing loans stand at 1.98% of loans outstanding, and the goal is to hold bad loans to less than 2% this year despite an aggressive loan-growth target of 15-20%.
The bank yesterday signed a memorandum of understanding with Samaggi Insurance Plc for bancassurance business cooperation.
LH Bank expects fee income from bancassurance business of 130 million baht, up from 43 million last year.
The bank has seven insurance partners, of which four are non-life insurers and three are life insurance firms.
LHBANK shares closed yesterday on the Stock Exchange of Thailand at 1.79 baht, down eight satang, in trade worth 48 million baht.