Emirates NBD seeks to raise Dh6.3 billion (US$1.72bn) to bolster its capital base during the financial crisis by converting emergency federal deposits, its chief financial officer said, sending shares higher.
The option to convert the deposits, which will bolster regulatory capital held as a cushion to absorb surprise shocks, is likely to be exercised by a number of banks in the UAE, CFO Sanjay Uppal said in an interview.
"This is not really a bailout," Mr Uppal said. "I see this as systemic support.
"I would consider it a bailout when the central bank is injecting money into the bank to support it," Mr Uppal said.
The conversion comes as UAE banks struggle to resume lending after the credit crisis hit the booming economies of the Gulf, provoking an exodus of foreign deposits and drying up liquidity banks need to lend to consumers and businesses.
"This option has been given to all banks in the country," Mr Uppal said.
The bank, one of the top three in the country, received Dh12.6bn as part of a larger programme sponsored by the Ministry of Finance in 2008 to boost liquidity in the banking system.
"Markets and institutions around the world have been impacted by the economic turmoil and central banks and governments in every part of the world are stepping up to support their financial systems and markets, and I think this has been a very supportive move to support us here," Mr Uppal said.
Shares in the bank were up 4.8 per cent in early trading, outperforming other UAE banks.
The conversion would boost the bank's capital adequacy ratio ? a key measure of the soundness of a bank ? to 14.3 per cent from 11.3 per cent at the end of 2008, when the bank wrote off Dh2.26bn in assets, Mr Uppal added.
* Reuters
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Day 5, Abu Dhabi Test: At a glance
Moment of the day When Dilruwan Perera dismissed Yasir Shah to end Pakistan’s limp resistance, the Sri Lankans charged around the field with the fevered delirium of a side not used to winning. Trouble was, they had not. The delivery was deemed a no ball. Sri Lanka had a nervy wait, but it was merely a stay of execution for the beleaguered hosts.
Stat of the day – 5 Pakistan have lost all 10 wickets on the fifth day of a Test five times since the start of 2016. It is an alarming departure for a side who had apparently erased regular collapses from their resume. “The only thing I can say, it’s not a mitigating excuse at all, but that’s a young batting line up, obviously trying to find their way,” said Mickey Arthur, Pakistan’s coach.
The verdict Test matches in the UAE are known for speeding up on the last two days, but this was extreme. The first two innings of this Test took 11 sessions to complete. The remaining two were done in less than four. The nature of Pakistan’s capitulation at the end showed just how difficult the transition is going to be in the post Misbah-ul-Haq era.