UAE bank UNB in talks with banks about bond issue
Union National Bank (UNB), 50 per cent owned by the Abu Dhabi government, is in talks with banks about issuing a potential benchmark-sized bond, three sources aware of the matter said.
Gulf banks have been active in raising money this year as liquidity becomes less abundant because of lower oil prices and as lending growth outpaces growth in deposits.
The size of UNB’s issue is still uncertain, but the sources said it was likely to be benchmark sized, which is usually taken to mean at least $500 million. The issue would be conducted under UNB’s $3 billion bond programme.
UNB declined to comment when contacted by Reuters.
Chief Executive Mohammad Nasr Abdeen said in February that the bank, the fifth-largest lender in Abu Dhabi by assets, could tap the bond market in 2016 to help supplement its deposit levels, which were expected to remain stable.
UNB said pressure on net interest income due to a higher cost of deposits was a factor in the 17.3 per cent year-on-year drop in net profit for the second quarter of this year.
One of the sources said the bank saw an opportunity to tap the bond market at a time when regional borrowing costs remain relatively low ahead of a potential interest rate hike in the United States later this year, and after the Bank of England last week cut rates for the first time since 2009.
UNB last raised money in October 2015 when it completed a $750 million three-year loan. The deal was arranged by Commerzbank, First Gulf Bank, HSBC, National Bank of Abu Dhabi and Standard Chartered. The last three lenders, along with Deutsche Bank and Citigroup, helped arrange the lender’s last foray into the bond market in late 2012.
The sources said UNB was finalising the list of arranging banks for its latest issue, which would likely take place during the third quarter.