Saudi British Bank plans capital-boosting sukuk sale - sources

DUBAI, May 7 (Reuters) - Saudi British Bank (SABB) is planning to sell a riyal-denominated sukuk that will boost its capital reserves, sources aware of the matter told Reuters on Thursday, with an announcement set to be made as early as next week.

The issue will boost SABB's Tier 2, or supplementary, capital and will be arranged by HSBC's Saudi Arabian unit , two sources said, who spoke on condition of anonymity as the information isn't public.

One of the sources added the sukuk could be worth 1.5 billion riyals ($400 million) and will have a 10-year lifespan but a clause that will allow the bank to redeem the issue at the end of the fifth year.

SABB couldn't be immediately reached for comment.

Saudi Arabian banks have been replenishing their capital reserves in the last couple of years after a period of strong lending growth, through issuance of capital-boosting bonds and bonus shares.

Riyad Bank announced plans to issue a 4 billion riyal bond to boost its capital base earlier this week. It will have the same 10-year, non-call five, structure that SABB is planning to offer.

The last time SABB completed such an issue was in December 2013, when it raised 1.5 billion riyals through an offering which had a seven year lifespan but which could be redeemed by the bank at the end of the fifth year. The deal priced at 140 basis points over the six-month Saudi interbank offered rate (Saibor). ($1 = 3.7501 riyals) (Reporting by Archana Narayanan and David French, editing by David Evans)