* Planned sukuk sale to boost lender's core capital
* Sale follows similar move by Abu Dhabi Islamic
* Picks HSBC, StanChart, NBAD, ENBD and itself
* Investor meetings to commence March 7
DUBAI, March 5 Dubai Islamic Bank, the
largest sharia-compliant lender in the emirate, plans to boost
its capital through a sharia-compliant debt instrument, the
lender said on Tuesday.
The bank will hold investor meetings in Asia, Middle East
and Europe starting March 7 ahead of issuing the
dollar-denominated, benchmark-sized hybrid sukuk, subject to
Benchmark-size is understood to be at least $500 million.
The potential sale will be arranged by Emirates NBD
, HSBC Holdings, National Bank of Abu Dhabi
, Standard Chartered and the bank itself, the
The public sale of a debt instrument to raise Tier 1 capital
is rare in the Middle East, and follows November's issuance by
Abu Dhabi Islamic Bank of a $1 billion Tier 1 sukuk.
ADIB's innovative hybrid Tier 1 perpetual sukuk, which has
no defined maturity date, was issued at par with a profit rate
of 6.375 percent after orders totalled over $15 billion.
The DIB sukuk will be classified as deeply subordinated,
with proceeds used to strengthen the bank's tier one or core
capital, a key measure of a bank's financial strength, rather
than booked as a liability on its balance sheet.
DIB's tier one ratio stood at 13.9 percent, as of December
2012, above the 12 percent regulatory requirement.
DIB's sukuk is callable at year six, according to an
investor presentation seen by Reuters, and on every periodic
distribution date after that.
It will carry a fixed profit rate of six-year midswaps over
the initial margin until first call and then the profit rate
will be reset to adjust for the then-prevailing six-year
midswaps over the initial margin.
Gulf banks are expected to comply with tighter Basel III
global standards for core capital, which will be gradually
introduced over coming years.