ADIB converts $599m to regulatory capital

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MONEY WISE: ADIB is the fourth Abu Dhabi bank to announce it has secured financing from the Ministry of Finance. (Getty Images - for illustrative purposes only)

Abu Dhabi Islamic Bank said on Sunday it had secured AED2.2bn ($599m) in emergency government deposits and converted it into regulatory capital, following similar moves by rivals in the credit crisis.

"The amount is AED2.2bn. Yes, all of it," Tirad Mahmoud, chief executive of ADIB, told Reuters when asked how much was received and whether all of it was converted into capital.

"Our rationale was simple. If we don't follow suit, other banks may optically look better capitalised," he said.

ADIB is the fourth Abu Dhabi bank to announce it has secured financing from the Ministry of Finance.

National Bank of Abu Dhabi and Abu Dhabi Commercial Bank have secured AED5.6bn and AED6.6bn dirhams, respectively, and have decided to convert it into a form of regulatory capital called Tier 2.

Union National Bank secured AED3.2bn dirhams and plans to convert it as well.

ADIB secured the facility from the ministry in two tranches in December, 2008, as part of the ministry's AED70bn liquidity initiative, he said.

With the conversion into Tier 2 capital, ADIB's total equity increases to 11.02 billion dirhams and its capital adequacy ratio (CAR) will be 19.75 percent, he said. (Reuters)

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