First Gulf Bank (FGB), the third largest lender by assets in the United Arab Emirates, has raised $1 billion in loans in order to boost lending as liquidity in the economy tightens, banking sources said.

Banks in the Gulf are turning to the loan market to raise funds, in addition to selling bonds, as depressed crude oil prices hurt liquidity and threaten to drag down economic growth.

FGB will pay 70 basis points over the London interbank offered rate (LIBOR) for the three-year facility, two sources with direct knowledge of the deal said.

Bank of America Merrill Lynch, Bank of Tokyo-Mitsubishi, Barclays, BNP Paribas, Citigroup, Commerzbank, Deutsche Bank, HSBC, ING, Mizuho, Natixis, Sumitomo Mitsui Banking Corp, UniCredit Bank and Wells Fargo Bank were mandated lead arrangers and bookrunners for the transaction.

After several quarters of strong lending growth, FGB's loan to deposit ratio reached 106.1 per cent in the second quarter of 2015, up from 99.9 per cent in the first quarter, according to the bank's financial statement.

The bank is rated A2, A+ by Moody's and Fitch respectively.

A spokesman for FGB declined to comment on the loan. The sources spoke on condition of anonymity as the information is not public. – Reuters