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Thu 24 Mar 2011 10:29 AM

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ADCB eyes sale of 25% stake in Malaysia’s RHB

The stake is worth $1.4bn, Abu Dhabi lender has shortlisted up to seven banks for sale

ADCB eyes sale of 25% stake in Malaysia’s RHB
A sale of the RHB stake “would largely address ADCB’s significant capital deficit,” analysts said

Abu Dhabi Commercial Bank, the UAE’s third-biggest bank by assets, is choosing advisers for the sale of a 25 percent stake in Malaysian lender RHB Capital, two people with knowledge of the matter said.

The bank hasn’t made a final decision on which advisers to pick for the sale, said one of the people, who declined to be identified because discussions are private.

ADCB has shortlisted at least six to seven banks to make proposals for the sale, Thomson Reuters unit International Financing Review reported yesterday on its website.

The stake is worth 4.3bn ringgits ($1.4bn), based on the closing price of $8.02 ringgits yesterday. RHB Capital shares rose 0.1 percent today at 1:37 p.m. in Kuala Lumpur.

Spokespeople for both companies declined to comment.

ADCB agreed in 2008 to pay 3.9bn ringgit for the RHB stake, the biggest overseas investment in a Malaysian bank.

UAE banks’ bad-loan provisions surged 36 percent in December from a year earlier to AED44.3bn ($12.1bn), according to central bank data.

A sale of the RHB stake “would largely address ADCB’s significant capital deficit,” HC Research said in a note following the IFR report. “ADCB would still be undercapitalized, in our view, but the capital deficit would be largely addressed.”

Proceeds from the sale “would be better used to bolster the capital base” than for paying dividends, the note said.

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