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Sun 20 Feb 2011 04:42 PM

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UAE lender FGB to convert bonds into shares Feb 21

First Gulf Bank to convert bonds worth AED3.6bn ($980.4m) into shares earlier than scheduled

UAE lender FGB to convert bonds into shares Feb 21
FIRST GULF: UAEs second biggest bank by market value, will list 125 million new shares on the Abu Dhabi bourse on February 21 (ITP Images)

Abu-Dhabi based First Gulf Bank

(FGB) is to convert bonds worth AED3.6bn ($980.4m) into shares earlier than scheduled, at a

valuation significantly higher than the current share price.

FGB, the UAE's second biggest bank by market

value, will list 125 million new shares on the Abu Dhabi bourse

on February 21 after converting bonds issued in July 2008 at a

price of AED28.80 per share, a statement said.

Shares in FGB ended 3.6 percent lower on Sunday, at AED17.10.

The bank's share capital will be adjusted to AED1.5bn

from AED1.38bn, the statement said.

"The board of directors and the management are confident of

the bank's rising profitability," said Andre Sayegh, chief

executive officer, in the statement.

"We are confident that as common shareholders, the

bondholders will benefit from their investment in the bank's

future growth over the years to come."

FGB issued the convertible bonds in 2008 to fund its growth.

The banking system in the UAE is trying to recover from a

sharp rise in provisioning and sluggish loan growth over the

past two years as the global financial crisis hit profitability.

Earlier this month, FGB reported a record full-year profit

of AED3.42bn but fourth-quarter net profit was

largely flat.

In January, FGB sold five-year bonds worth 200 million Swiss

francs ($211.8m) with a coupon of 3 percent after holding

off on a benchmark $500m bond citing volatile market

conditions, at the end of 2010.

($1=AED3.672)

($1=0.9443 Swiss franc)