x Abu Dhabi, UAEFriday 19 January 2018

Emirates NBD eyes Dh6.3bn capital boost

Gulf's largest bank looks to raise cash to bolster its capital base during the financial crisis.

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