Gulf's largest bank raises $1.09bn

Dubai-based lender Emirates NBD on Tuesday said it raised 4 billion dirhams ($1.09 billion) by issuing debt securities to the bank's majority shareholder, the Investment Corporation of Dubai (ICD).

The Gulf Arab region's largest bank by assets said the 4 billion dirhams in debt securities will lift its tier 1 ratio - a measure to assess a bank's financial strength - to more than 11 percent.

Confronted with plummeting asset values and heavy losses as a result of the crisis, banks worldwide have had to raise capital, often turning for help to local governments, to meet central bank minimum requirements.

In March, the lender said its tier 1 capital ratio stood at 9.4 percent and that the bank was required to raise about 3.5 billion dirhams to meet its 2009 target.

Banks in the United Arab Emirates (UAE) had until June 30 to comply with the new central bank's capital requirements.

ICD, the emirate's sovereign wealth fund which owns slightly more than half of the bank, is the sole investor in securities, which have a fixed rate coupon of 6.45 percent for the first five years before becoming floating rate, the bank said in an emailed statement.

"A strong banking system is essential for the continued development of the UAE and through this injection of tier 1 capital, the Investment Corporation of Dubai is able to demonstrate its full commitment to Emirates NBD," Mohammed Ibrahim Al-Shaibani, ICD chief executive said. (Reuters)

READERS' COMMENTS

MORE FROM ARABIANBUSINESS.COM