Sonali Bank fears its operating profit will slip by Tk 8.0 billion this year as fallout of the Covid-19 pandemic, causing further capital shortfall.
The country's biggest state lender made some Tk 19 billion as operating profit in 2019, but failed to lower capital shortfall failing to make handsome net profit as high non-performing loans and provisions deficit weighed.
The Basel-III rules also widened its capital shortfall, which this year would reach Tk 100 billion.
Sonali has recently requested the government to issue perpetual bond in favour of the bank to meet the capital shortfall, which is considered an impediment to the bank's international trade.
Sonali Bank managing director Ataur Rahman Prodhan said like the economy, the entire banking sector will also face the severe impacts of coronavirus.
"The profit of the bank will definitely see a downward spiral as economic activities in the country has remained almost halted for months," he said.
Mr Prodhan, in a letter to the finance division, said due to stringent rules of Basel-III, the deferred tax assets, revaluation reserves and provision shortfall are being deducted from capital, which eats up net profit.
He wrote if the Basel-III is fully implemented by this year, the banks will have to preserve 2.50 per cent of the capital as conservation buffer and 12.50 per cent against risk-based assets.
Besides, Sonali Bank will have to keep 2.50 per cent of the capital as an important domestic bank and 2.50 per cent as counter cyclical capital buffer, which raise total preservation of capital by 17.50 per cent against the risk-based assets.
Mr Prodhan told the FE on Thursday he has proposed three options to the government to lower the capital shortfall of the bank, which include providing cash support from the exchequer, issuing bank guarantee that can be considered capital by the central bank, and issuing perpetual bond.
The bank will issue shares against any of the three options in favour of the government to get the required capital of Tk 100 billion.