The National Commercial Bank (NCB) announced the successful completion of its US dollar-denominated Additional Tier 1 capital issuance, raising US$1 billion. This strategic move is part of the bank's efforts to strengthen its capital base and diversify its funding sources.
Issue details and financial returns
In an official statement published on the Saudi Stock Exchange (Tadawul) website, the bank clarified that the total value of the offering reached $1 billion, distributed across 5,000 bonds, based on the minimum denomination and the total issuance size. The nominal value of each bond was set at $200,000. Regarding the yield, a rate of 6.15% per annum was set, reflecting the high level of confidence the bank enjoys in international financial markets despite fluctuations in global interest rates.
The statement indicated that the maturity period of these bonds is "perpetual," with redemption possible after 5.5 years from the settlement date scheduled for January 22, in accordance with the terms and conditions detailed in the basic offering memorandum.
Enhancing financial efficiency and creditworthiness
Additional Tier 1 bonds are a vital tool for global banks to bolster their capital adequacy in accordance with Basel III requirements, without directly diluting existing shareholders' equity. This offering by the National Commercial Bank (NCB) further strengthens its already robust financial position, granting it greater flexibility in managing liquidity and responding to economic fluctuations.
The National Bank of Saudi Arabia is a pivotal player in the regional banking sector, especially after the historic merger with Samba Financial Group, which created a giant banking entity with enormous lending capabilities and a huge balance sheet that qualifies it to lead the financial scene in the region.
Supporting the goals of the Kingdom's Vision 2030
This financial activity cannot be separated from the overall economic context of Saudi Arabia. National banks play a crucial role in financing major projects and initiatives stemming from the Kingdom's Vision 2030. The implementation of mega-projects, infrastructure development, and economic diversification require substantial cash flow and a robust capital base for the financing institutions.
Through this successful issuance, the National Bank of Saudi Arabia confirms its readiness to contribute effectively to economic growth, taking advantage of the appetite of international investors for Saudi investment instruments, which in turn reflects the strength of the Saudi economy and its positive credit rating with global rating agencies.
