UAE's RAK Bank to convert gov't deposit to capital

RAK Bank will seek shareholder approval to convert emergency federal deposits made last year to stave off the financial crisis into regulatory capital, the bank said in a statement on Monday.

RAK Bank, or The National Bank of Ras Al Khaimah, will seek approval for the move at an extraordinary shareholder meeting on April 8, according to the statement posted on the bourse website.

Other banks pursuing similar moves are top lenders the National Bank of Abu Dhabi and Emirates NBD.

RAK Bank, with a market value of $614 million, is one of the smaller banks in the United Arab Emirates with a strong focus on retail and consumer credit. Its shares have fallen 59 percent since the crisis hit Gulf Arab states in August.

Banks in the second-largest Arab economy, where former boomtown Dubai is facing a real estate price correction, are looking to shore up their stockpile of capital as loan defaults mount and they take provisions for more bad loans to come.

Banks across the oil-producing Gulf have written down the value of investments and taken provisions against an expected rise in bad loans after the region's economic boom came to an end late last year as oil prices collapsed. Regulatory capital, which is categorised into tiers according to the robustness of the capital, is used as a cushion to support banks in case of surprise losses. (Reuters)

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