UAE's First Gulf Bank repays $1.2bn gov't support

  • Share via facebook
  • Tweet this
  • Bookmark and Share

Abu Dhabi-based First Gulf Bank has fully repaid federal government funds it received as support in the wake of the global financial crisis, it said on Monday, a move other banks in the country are expected to follow in 2013.

The United Arab Emirates' Ministry of Finance placed AED70bn (US$19.1bn) with banks to shore up balance sheets after the collapse of Lehman Brothers in September 2008 triggered a seizure of the world's financial system.

However, banks were expected to prioritise repaying this support, converted into seven-year capital-boosting bonds in late 2009, this year as the value of the capital instruments was diminishing and banks could raise cheaper finance in the market.

FGB, the second-largest lender in the UAE by market value, repaid AED4.5bn (US$1.2bn) to the ministry out of its own cash reserves, the statement said.

The repayment was made given the bank's "very strong financial position by end of 2012," the statement added.

The bank is the largest UAE institution so far to fully repay its bonds, which boosted Tier 2, or supplementary, capital.

Other banks have also been acting to address the bonds.

National Bank of Abu Dhabi originally converted AED5.6bn of support into bonds but repaid AED2.6bn last year, while National Bank of Ras Al Khaimah , the UAE's ninth-largest bank by market value, repaid all of its AED684.5m of support during 2012.

Last week, Abu Dhabi Commercial Bank raised a US$750m subordinated bond as part of a US$1.5bn two-tranche debt offering. Subordinated debt can be counted towards a bank's Tier 2 capital ratio.

Related:
Companies

Market Performance

First Gulf Bank
17.75
-0.25 -1.39 (%)
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
The spectacular rise and fall of Arabtec

The spectacular rise and fall of Arabtec

The ups and downs of Dubai most heavily traded stock teaches...

1
MidEast investors eye $180bn overseas spending

MidEast investors eye $180bn overseas spending

Arab institutional investors have been buying up swathes of ...

Gateway to a new era

Gateway to a new era

Could Telr be the answer to start-ups’ prayers? The new three...

Most Discussed