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Monday, 09 November 2009 06:16 UAE time

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UNB converts state deposits into Tier 2 capital

by This email address is being protected from spam bots, you need Javascript enabled to view it  on Sunday, 22 March 2009
CAPITAL FUNDS: Union National Bank is following other UAE banks in changing federal deposits into regulatory capital.

Abu Dhabi's Union National Bank said on Saturday it would convert into regulatory capital AED3.2bn ($871.2m) of state deposits.

The bank is the latest in the UAE to say it would convert deposits from the government's AED70bn state facility into Tier 2 capital.

"The bank will convert the entire AED3.2bn of deposits from the Ministry of Finance into Tier 2 Capital," Chief Executive Mohamed Nasr Abdeen said at the bank's annual general meeting.

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"(The conversion) will increase the bank's capital adequacy ratio (CAR) to nearly 20 percent ... from the present 11 percent," he said.

Abdeen said he expected loan growth in the range of 10 percent this year.

"Definitely we will be choosy, but we will lend to sectors supporting the economy," he said.

"Interbank liquidity is good enough but liquidity to move the economy is not enough."

UNB's loan-to-deposit ratio had come down to 90 percent from 101 percent in 2008 after securing deposits, Abdeen said.

The meeting also saw the approval of the board's proposal for a 10 percent cash dividend that will amount to a total of AED187.5m, as well as the approval of a 1-for-10 bonus share issue.

The bank's share capital would rise to AED2.062bn from AED1.875bn dirhams once the bonus share issue was implemented, Abdeen said.

UNB had also scaled back its expansion plans for its Egyptian unit, Union National Bank Egypt, he said.

"The Egyptian bank expansion may not be as per the original strategy," he said, adding that the bank had initially wanted to open 20 new branches in Egypt every year.

"We will expand with a much lesser number," Abdeen said. (Reuters)

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