State-owned Libyan Foreign Bank (LFB) plans to raise its capital 10-fold to $10 billion to finance acquisitions in Europe and Africa and will up its stake in HSBC affiliate British Arab Commercial Bank.

Libya, home to Africa's largest oil reserves, has seen revenue grow as it emerges from decades of Western sanctions, and the government is looking abroad for profitable investments.

'Our capital is $1 billion, we hope to get it up to $10 billion, that's our plan hopefully in the next two to three years,' chairman Mohamed Bait-Elmal said, adding that the lender would get the additional funds from shareholders.

'We are going to have a new strategy because of the changes in the world,' Bait-Elmal told reporters on the sidelines of a banking conference in Dubai. 'We would like to have participation in London, USA, Paris, Rome.'

Western firms have turned increasingly to Arab oil exporters and their sovereign wealth funds for cash as the financial crisis freezes credit markets and hits their market values.

Bait-Elmal said LFB, which provides retail and wholesale services, was in the process of raising its stake in British Arab Commercial Bank, in which HSBC holds 48 per cent, to make the bank a hub for its European operations.

'We will buy HSBC's shares they will go down to 19 per cent and we will be buy the rest,' Bait-Elmal said, adding it would also buy shares from other shareholders to take its stake above 70 per cent. 'We hope to have it by end of the year.'-Reuters