Banque Saudi Fransi Said to Plan $533 Million Tier 2 Sukuk

Banque Saudi Fransi, the Saudi lender part owned by Credit Agricole SA, is planning to raise about 2 billion riyals ($533 million) to bolster its capital base, according to two people familiar with the matter.

The Riyadh-based lender’s investment banking arm, Saudi Fransi Capital, will help arrange the sale of capital-boosting Tier 2 sukuk, the people said, asking not to be identified as the information is private. The sale could take place within the next month, according to the people.

Banque Saudi Fransi has the third-lowest capitalization ratio of Saudi Arabia’s 11 listed Saudi banks, according to data compiled by Bloomberg. Several are seeking to boost capital to comply with stricter capital rules under new banking regulations known as Basel III, drawn up after the global financial crisis. National Commercial Bank said it raised 5 billion riyals from the sale of Tier II sukuk in February.

“Banque Saudi Fransi’s total capitalization, Tier-1 and core equity Tier-1, is at the lower end of the Saudi banks,” Jaap Meijer, head of equity research at Arqaam Capital in Dubai, said by phone today. “There’s room for them to raise additional Tier 2 capital following successful deals by the likes of NCB earlier this year. This should diversify its funding base and reduce its maturity mis-match position.”

A spokesman for Banque Saudi Fransi declined to comment. Credit Agricole owns about 31 percent of the bank.

Saudi Hollandi Bank, 40 percent owned by ABN Amro, raised 2.5 billion riyals in December from the sale of Tier 2 sukuk, while Saudi British Bank raised 1.5 billion riyals to boost capital in the same month.

Before it's here, it's on the Bloomberg Terminal.