UPDATE 1-Abu Dhabi bank Al Hilal eyes $500 mln Islamic bond - exec
* $500 mln sukuk is first tranche of global sukuk
* Al Hilal sukuk programme between $2 bln and $5 bln
* Sukuk seen launching in fourth quarter (Recasts, changes source)
DUBAI, Aug 29 (Reuters) - Abu Dhabi government-owned Al Hilal Bank plans to raise $500 million through the sale of a 5-year Islamic bond, or sukuk, in the fourth quarter, an official told Reuters on Monday.
The issuance would be the first tranche of a global sukuk, the official said, adding that the lender's sukuk programme is expected to be between $2 billion and $5 billion.
The potential issue would be the first sukuk sale for the lender. The official declined to be identified as he was not authorised to speak to media.
Earlier in the day, Al Hilal's Chief Executive Mohammad Berro told local daily Gulf News that the Islamic bank will use proceeds to support the bank's growth and diversify its funding.
"We are hoping to close the issue by the end of the last quarter this year," Berro told the newspaper in an interview.
Berro said the currency of the Islamic bond and the lead manager of the issue would be announced at a later date.
In July, Berro told Reuters that the unlisted bank, wholly owned by the Abu Dhabi Investment Council (ADIC), will look at tapping capital markets through a sukuk sale by the end of the year or in 2012.
Another regional daily reported on Monday that the bank could seek to issue at least $1 billion in sukuk by the end of the year, citing Al Hilal's head of wholesale banking.
Investor appetite for Islamic debt from the region has proved resilient despite market volatility. UAE lender First Gulf Bank raised $650 million from the sale of five-year Islamic bonds in July, in a significantly oversubscribed deal that benefited from solid global demand for Sharia-compliant paper.
Issues from entities such as Sharjah Islamic Bank , which launched a $400 million sukuk in May, and HSBC Middle East, with a $500 million offering the same month, also set a positive tone with both issues well oversubscribed.
(Reporting by Stanley Carvalho and Shaheen Pasha, Editing by Dinesh Nair)