Dubai’s Emirates NBD (ENBD), the largest lender in the emirate by assets, and the mid-size Commercial Bank of Dubai (CBD) are in talks with banks to raise a combined total of up to $1.7bn in loans to refinance existing debt.

ENBD intends to secure a three-year loan of up to $1.2bn, although the final amount it will raise has yet to be determined, according to UK news agency Reuters, which cited unnamed sources familiar with the talks.

The bank plans to refinance an existing $800m loan that matures in December. It had secured the financing facility in December 2013 with a pricing of 140 basis points over the London interbank offered rate (Libor).

ENBD, which reported an 8 per cent increase in first-quarter net profit has embarked on a cost cutting spree. The lender closed down operations of its subsidiary Emirates Money and laid off more than 100 people. Earlier in the year, ENBD’s sharia-compliant arm, Emirates Islamic (EI) slashed about 200 jobs as part of a wider organisational restructuring, sources familiar with the situation told MEED.

Meanwhile, Dubai-listed CBD is looking to refinance a $450m loan, which also matures in December this year. The three-year facility had a pricing of 125 basis points over Libor. CBD intends to secure a total of $500m with a lifespan of three years.

ENBD and CBD are the latest among regional financial institutions that are striving to raise debt as liquidity in the regional markets comes under pressure on the back of the lower oil prices. Crude, the main source of income for GCC governments, has dropped from a mid-2014 peak of more than $110 per barrel. Gulf states have resorted to tapping the financial markets with local currency bonds and have withdrawn funds from the banking system to plug budget deficits.

Borrowing costs have already risen for GCC lenders as investors price the regional debt higher. The banks are keen to raise funds before a possible further rise in borrowing costs later in the year if the US Federal Reserve hikes interest rates again.

Qatar’s Ahlibank is another regional lender looking to secure a loan. The bank has started talks to raise a $250m three-year loan to refinance an existing $200m facility it signed in September 2014 and is due to mature next year, Reuters reported earlier this week.