DUBAI: Saudi Investment Bank (Saib) has picked the investment banking arm of Riyad Bank to arrange a subordinated Islamic bond issue, banking sources said yesterday, the latest lender in the kingdom to eye a capital-boosting sukuk offering.
The lender, Saudi Arabia’s seventh-largest listed bank by assets, has chosen Riyad Capital for the riyal-denominated offering, two sources said. One added that the transaction could take place before Ramadan.
Saib could not be reached for comment. However, Saib shareholders are due to be asked at the bank’s annual general meeting on April 1 to approve the issuance of Shariah-compliant “debt instruments of all kinds”, according to a March 6 bourse filing.
The sukuk will enhance the bank’s Tier 2 — or supplementary — capital.
The bank’s total capital adequacy ratio at the end of 2013, which combines both Tier 1 — or core — and Tier 2 capital, and is a key indicator of the bank’s financial health, stood at 15.12 percent, down from 17.62 percent at the same point of 2012.
While lenders in Saudi Arabia have high capital ratios compared to Western banks, due to the regulator’s conservative stance, a period of sustained lending growth has led many banks to sell such instruments to strengthen their reserves.
Bank lending grew at its slowest clip in two years in January, but was still at a substantial 12.3 percent year-on-year, according to central bank data. Reuters
