Emirates Islamic plans capital-boosting bonds

The Dubai-based Sharia-compliant lender Emirates Islamic is planning to issue capital-boosting bonds compliant with Basel III banking standards depending on market conditions, the bank’s chief executive said yesterday.

The bank may this quarter sell Tier 1 and/or Tier 2 bonds as part of plans of boosting its long-term funding, Jamal bin Ghalaita said on the sidelines of an Islamic banking conference in Dubai.

“We want 10 to 15 per cent of the bank’s balance sheet liquidity to be raised on a long-term funding,” said Mr Ghalaita. “[Currently] long-term funding is very little, so we are going to work on that.”

Banks in the Arabian Gulf are issuing capital-boosting bonds as part of raising new funds through capital tools to foster growth and comply with the new Basel III banking rules.

Gulf banks will issue US$43 billion worth of Basel III compliant debt by 2019 to bolster the quantity and quality of their capital base, the Dubai-based investment firm Arqaam Capital said in a report yesterday.

Arqaam estimates that Gulf banks will issue $17bn worth of Tier one or core capital, and $26bn of Tier 2 or supplementary capital, bonds.

Emirates Islamic posted a 97 per cent increase in first half net profit to Dh447 million.


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