| DUBAI, March 20
DUBAI, March 20 Saudi Investment Bank
(Saib) has picked the investment banking arm of Riyad Bank
to arrange a subordinated Islamic bond issue, banking
sources said on Thursday, 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, speaking on condition of anonymity
as the information is not public. One added that the transaction
could take place before Ramadan.
The Muslim month of fasting is due to begin at the end of
June this year.
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
sharia-compliant "debt instruments of all kinds", according to a
March 6 bourse filing.
The sukuk will enhance the bank's Tier 2 - or supplementary
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
While lenders in the kingdom 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.
National Commercial Bank, the kingdom's largest
lender, sold a 5 billion-riyal ($1.33 billion) subordinated
sukuk last month.
Meanwhile, Riyad Bank completed a 4 billion-riyal issue in
November, and Saudi Hollandi Bank priced a 2.5
billion-riyal offering in December.
($1 = 3.7503 Saudi Riyals)
(Editing by Keiron Henderson)