Emirates NBD, Dubai's largest bank by market value, has picked HSBC and UBS to arrange an exchange of two notes due in 2016 into a new seven-year facility, sources said on Tuesday.

Investors in two existing $500 million facilities due in 2016 have been invited to exchange the subordinated notes for new senior notes maturing in 2018, allowing the bank to extend its debt maturity profile.

"They are doing an exchange of their Tier 2 into senior (notes). HSBC and UBS are on it," said a banking source on condition of anonymity.

Another source also said the exchange would give investors a chance to own senior notes.

The company confirmed the exchange offer in an emailed statement to Reuters.

Of the two facilities, only $345.5 million is outstanding on one and $168.5 million is outstanding on the other, a note from the company sent to Reuters said.

"The purpose of the exchange offer is to retire a portion of the existing notes which represent surplus capital in order to improve the efficiency of the capital structure and optimise ENBD's liquidity profile by refinancing with senior unsecured funding," the note said.

Emirates NBD will announce the result of the exchange offer on May 26, and the setllement date is May 31, the note said.

The lender has about 12.9 billion dirhams in debt maturing in the next two years, with 3.8 billion dirhams due in 2011 and just over Dh8 billion next year.-Reuters