Government of Sharjah to acquire stake in struggling Invest Bank
Emirate's government is the largest shareholder in Sharjah's banking sector.
The Sharjah government will take a majority stake in struggling Invest Bank, the lender said on Friday, in a move it said would help ensure its future growth.
Invest, one of the smaller banks in the UAE, was hit by recent high levels of bad loans, partly due to its exposure to the troubled real estate and construction market.
The lender, currently 15.5 per cent owned by Sharjah-based International Private Group, said its board of directors will recommend a capital injection by the Sharjah government which will make it a majority strategic investor in the lender.
It did not give details of the size of the stake or the value of its investment.
"Invest Bank and the government of Sharjah consider that the latter's injection of capital is the best option to enable the bank to continue to grow and prosper," the bank said.
The investment is subject to regulatory and shareholder approvals, it added.
It did not say whether the investment was linked to a potential merger between Invest Bank and Bank of Sharjah, in which the government holds a 17.2 per cent stake. Merger talks between Bank of Sharjah and Invest Bank began last year, sources told Reuters at the time.
Reuters also reported in October that the Sharjah government was weighing a potential merger between those two banks and another Sharjah-based lender, United Arab Bank (UAB). Invest Bank and UAB both denied the report.
Sharjah's investment in Invest Bank will be made on a commercial basis, Invest Bank said. The government is the largest shareholder in Sharjah's banking sector.
A shake-up is already under way in the Emirates' crowded banking industry, where about 50 banks serve a population of about nine million people.
Three Abu Dhabi banks are currently in talks to merge, after two of the emirate's biggest banks linked up last year to create First Abu Dhabi Bank.
Updated: December 16, 2018 09:42 AM