RIYADH May 2 HSBC-controlled Saudi British Bank
(SABB) is in discussions with lenders over a U.S.
dollar-denominated bond issue that could come as early as this
month, banking sources familiar with the matter said on Tuesday.
The bank has appointed HSBC, which has a 40 percent
stake in the lender, as financial adviser for the establishment
of a debt programme but no banks have been formally named for
the potential issue, said one source close to the situation.
An HSBC spokeswoman declined to comment.
If the sale goes ahead, SABB would be the first Saudi bank
to raise funds internationally since the kingdom raised $17.5
billion with its first international bond last year.
That issue was seen paving the way for Saudi companies to
follow suit. Banks in particular were expected to tap
international markets soon after the jumbo sovereign issue, but
improved liquidity in the banking system has slowed their plans.
Nevertheless, continued regulatory pressures and higher
non-performing loan ratios caused by low oil prices are expected
to drive Saudi banks and lenders in the Gulf more generally to
turn to debt financing, bankers said.
It is possible that SABB's debt sale, which is likely to be
a subordinated bond, could be delayed by the lender's merger
talks with Alawwal Bank, which were announced at the end of
April, said the sources.
SABB is the kingdom's sixth largest bank by assets. A merger
with Alawwal Bank would create an entity with assets worth
nearly $80 billion.
SABB said at the end of March it planned to establish a
sukuk programme of up to $2 billion which could include local
currency and dollar-denominated Islamic bonds. It said it would
establish the programme in the second quarter.
(Editing by David Clarke)