Saudi lender NCB raises 1 bln riyal capital-boosting sukuk

Perpetual sukuk will boost bank’s tier 1/core capital

* JP Morgan, NCB Capital arrangers for the transaction

* Sukuk will extend maturity profile of NCB ‘s liabilities

DUBAI, June 22 ( Reuters ) – Saudi Arabia’s National Commercial Bank ( NCB ) became the latest lender in the kingdom to announce the sale of a capital-boosting Islamic bond, raising 1 billion riyals ($267 million) through a sukuk which will enhance its core capital.

The kingdom’s largest bank said on Monday the privately-placed sukuk, which would boost its Tier 1 capital, was Basel III-compliant and had a perpetual tenor, although the bank would have the right to call the sukuk on a predefined date.

However, it did not disclose the call date in the bourse filing announcing the transaction.

NCB joins a string of Saudi Arabian banks that have sought to replenish their capital reserves in the last couple of years, by issuing capital-boosting bonds and bonus shares, after a period of strong lending growth.

Sources told Reuters earlier on Monday that Riyad Bank , Saudi Arabia’s fourth-largest lender by assets, had completed a sukuk worth 4 billion riyals which would enhance its Tier 2, or supplementary, capital.

Saudi British Bank , the kingdom’s sixth-largest lender, privately placed a 1.5 billion riyal subordinated Tier 2 sukuk last month.

Capital reserves are high in Saudi Arabia, compared with Western standards, due to the kingdom’s conservative regulatory standards.

At the end of March, NCB had a total capital adequacy ratio, which includes both Tier 1 and Tier 2 capital, of 17.1 percent, down from 18.2 percent at the same point of 2014, according to its financial statements.

JP Morgan and NCB Capital, the investment banking arm of NCB , were the deal’s arrangers.

“The sukuk will also extend the maturity profile of NCB ‘s liabilities while continuing to diversify its sources of funding,” the statement added. ($1 = 3.7508 riyals)

(Reporting by Archana Narayanan; Editing by David French and David Holmes) ((archana.narayanan@thomsonreuters.com; +971 445 36240; Reuters Messaging: archana.narayanan.thomsonreuters.com@reuters.net))

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