Investment firm Dubai Group has sold its credit card business to Abu Dhabi lender First Gulf Bank (FGB) for $164m, the latest asset disposal by the debt-laden firm as it restructures $10bn in debt.
A unit of Dubai Holding, the investment arm of the ruler Sheikh Mohammed bin Rashid al-Maktoum, Dubai Group has been in talks with bank creditors for nearly three years, since the global credit crunch savaged its portfolio of assets.
In a statement on Sunday, FGB, the second largest bank in the United Arab Emirates by market capitalisation, said it agreed to buy Dubai First, which specialises in liability and credit card products, from the investment firm for AED601m.
The Dubai First acquisition will help FGB expand its customer base in the UAE, the lender said in a statement. Dubai First has a 4.5 percent share of the UAE's credit card market and has 464 employees, the statement said. Its latest audited accounts showed gross assets of AED700m, FGB said.
The sale is part of Dubai Group's efforts to cut down its debt pile, most of which was accumulated during the boom years of the mid-2000s.
"The sale is a strategic decision for Dubai Group and is part of our stated plan to sell down assets, in order to support our broader ongoing restructuring process," Fadel al-Ali, Dubai Group's chief executive, said in the statement.
Dubai Group's assets are worth just a fifth of its $10bn of debt, sources involved in its restructuring said in June. It has a portfolio of mainly financial services assets.
The firm has been selling down some of its smaller assets in the restructuring. But it has some major assets, such as its stake in Oman's Bank Muscat, which is secured against debt held by France's Natixis. Shares in Malaysia's Bank Islam are pledged against a $330m loan facility.
FGB is among Gulf Arab banks seeking to expand its regional footprint and looking for acquisition opportunities. In May, it hired Simon Penney, the former chief executive of Royal Bank of Scotland's Middle East and Africa business, to head its wholesale banking business.