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Saudi Hollandi sukuk sale to boost capital

JEDDAH: Saudi Hollandi Bank plans to sell a capital-boosting sukuk to private investors, it said, the latest bank in the Kingdom to bolster its reserves after strong lending growth.
The lender said its board approved plans to issue the Islamic bond subject to approval from relevant authorities.
It did not mention the amount it plans to raise from the offer.
In a separate statement, the bank said it would hold a shareholder meeting on Oct. 28 to seek approval for the sukuk offering.
Saudi banks are well capitalized compared with their Western peers — Saudi Hollandi’s capital adequacy ratio, a measure of a bank’s financial health, was 16.4 percent at the end of the second quarter, according to its financial results.
However, some have sought to boost their capital ratios in recent months following years of high lending growth.
While bank lending to the private sector grew at its weakest rate for nine months in August, according to central bank data, the level was still 15 percent higher than the same month last year.
Saudi Hollandi sold a SR1.4 billion ($373.3 million) Islamic bond in November to boost its Tier 2, or supplementary capital.
The seven-year offering, with an option to be redeemed by the issuer after five years, was priced at 1.15 percent over the six-month Saudi interbank offered rate.
Saudi British Bank 1060.SE, an affiliate of HSBC, aims to sell an Islamic bond by year-end to strengthen its capital base, sources told Reuters last month, and Banque Saudi Fransi, part-owned by Credit Agricole, completed a 1.9 billion riyals subordinated sukuk in December.

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