Arqaam expects GCC banks to issue $43 billion of Basel III compliant debt by 2019

Monday, October 5, 2015

Arqaam Capital (“Arqaam”), the specialist emerging and frontier markets investment bank, expects GCC banks to issue $43 billion of Basel III compliant debt by 2019 in order to improve the quantity and quality of their capital base.

Jaap Meijer, Managing Director- Research at Arqaam Capital said: “GCC banks are on the verge of issuing new Basel III compliant bonds with improved loss absorption features. This should increase capital buffers and enhance the GCC banking sector’s ability to absorb shocks arising from potential financial and economic stress. The new regulatory framework requires banks to not only increase capital buffers, but also to diversify the structure of these buffers and enhance its quality”. “Arqaam Capital estimates that GCC banks will issue $17 billion of Additional Tier 1 bonds and $26 billion of Tier 2 bonds in order to optimize their balance sheets and improve capital positions.”

Basel III is a set of reform measures designed to improve the regulation, supervision and risk management within the banking sector. Banks have until the end of 2018 to comply with the new capital requirements.

Arqaam actively participates in the MENAT and Sub Saharan African fixed income markets with global distribution capabilities. Arqaam is a market-maker and participant in the primary and secondary markets for a broad variety of fixed income securities, including government debt, corporate bonds , Islamic bonds (Sukuk), derivatives and foreign exchange.