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Thu 7 Apr 2011 04:37 PM

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Bahrain's AUB to issue $125m preferential shares

Gulf kingdom’s largest bank will also borrow a $165m loan from World Bank unit, the IFC

Bahrain's AUB to issue $125m preferential shares
CAPITAL BOOST The World Banks IFC has financed Ahli United Banks (above) regional expansion to boost regional capital markets

Ahli United Bank, Bahrain's largest bank, said on Sunday it will raise $125m by issuing 500 million preferential shares to the International Finance Corporation (IFC).

IFC, a unit of the World Bank, can convert the shares into ordinary shares over the next four years, AUB said in a statement to Bahrain's stock exchange.

The preferential share issue is to boost the bank's tier 2 capital, a measure of a bank's financial strength. AUB also said it would also borrow a subordinated loan worth $165m from IFC.

Banks in the Gulf Arab region have sought to prop up their balance sheets in recent months raising fresh capital or issuing bonds.

AUB also said it had agreed with IFC to extend the duration of an existing $200m, tier-II convertible subordinated loan issued by IFC by two years to 2018.

The World Bank's IFC has financed AUB's regional expansion to boost regional capital markets, and it also plans to invest in AUB's Iraqi unit, the Commercial Bank of Iraq (CBIQ).

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