Burgan Bank issues US$500m Additional Tier1 capital

Press release

Published September 25th, 2014 - 05:47 GMT

Mr. Majed Essa Al Ajeel, the chairman of Burgan Bank

Burgan Bank, Kuwait’s second largest commercial bank by assets, has successfully priced USD 500 million Perpetual Additional Tier 1 securities. Pricing took place following successful investor meetings in Europe, Asia and the Middle East.

These securities have been structured to comply with the new Basel III global guidelines and is the first issuance of its kind by a Kuwaiti bank. The bank has a history of being a pioneer in Kuwait for issuance of capital instruments having previously issued 10 year subordinated Lower Tier 2 bonds in 2012 which was also the first of its kind in terms of tenor and size. Both the Additional Tier 1 and Tier 2 issuances were well oversubscribed with a strong demand from both regional and international investors.

The Additional Tier1 securities have been issued with an initial coupon of 7.25%. and are perpetual instruments that are callable by the bank after five years. The current ratings of Burgan Bank are A3 (stable) by Moody’s and BBB+(stable) by S&P. Sole Global Coordinator for the issuance was HSBC, Joint Lead Managers are Citigroup, HSBC, JP Morgan and National Bank of Abu Dhabi and the co-lead manager is Burgan Yatirim Menkul Degerler A.S .

Mr. Majed Essa Al Ajeel, the chairman of Burgan Bank commented that: ‘This transaction is a testimony to the confidence that the investment community has in our business.’

“The bank’s decision to issue the perpetual tier 1 securities is in line with its plan to enhance our capital ratios in compliance with Basel III and to further achieve appropriate scale and level of business performance to support future growth plans.” Added Mr. Al-Ajeel.

“The issuance of these perpetual securities, will enhance the quality of the capital with no dilution effects on current shareholders”. Concluded Mr. Al-Ajeel

Burgan Bank Group has one of the largest regional branch networks with more than 230 branches across Kuwait, Turkey, Jordan, Algeria, Iraq, Tunis, Lebanon and Palestine.

Background Information

Burgan Bank

Established in 1977, Burgan Bank is the youngest conventional Bank and second largest by assets in Kuwait, with a significant focus on the corporate and financial institutions sectors, as well as having a growing retail, and private bank customer base. Burgan Bank has majority owned subsidiaries in the MENAT region supported by one of the largest regional branch networks. which include Gulf Bank Algeria - AGB (Algeria), Bank of Baghdad - BOB (Iraq & Lebanon),Tunis International Bank – TIB (Tunisia), and fully owned Burgan Bank – Turkey, (collectively known as the “Burgan Bank Group”). Furthermore, Burgan Bank has a present in the UAE through its corporate office (“Burgan Financial Services Limited) which had helped the bank to participate in multiple financing opportunities in the UAE.