Bank of Moscow, which plans to raise as much as $2 billion this year, said yesterday it may tap liquidity in the Gulf region after signing its first loan deal in the Middle East.

The bank, the fourth-biggest lender in Russia by assets, said it had signed a $220 million, 18-month loan, which was increased from $150 million after an oversubscription.

"This transaction is a new one for us," the bank's executive vice-president Pavel Gorbatsevich said.

"We intended to establish new business contacts (in the Middle East)."

"Russian banking institutions and communities are hungry for funding, with the Middle East being a liquid area driven by the petro dollar," said RZB vice-president Zaid Maleh.

The loan will be used for general corporate funding needs, and pays a margin of 65 basis points over London interbank offered rate, the bank said.

"I expect this year it (borrowing) will come to $1.5 to $2 billion," Gorbatsevich said, when asked how much the bank expected to raise in 2008.

Other banks arranging the loan were ABN-Amro, Deutsche Bank, and Emirates NBD.

Bank of Moscow, controlled by the city government of the Russian capital, has total assets of 528bn roubles ($22.16 billion), according to the bank.