UAE banks to see AED 4b capital increase

By: Mahmoud Gamal

Dubai – Mubasher: Banks operating in the UAE are at pains to increase their capital, coinciding with forecasts regarding raising key interest rates gradually in 2018.

Three UAE-listed banks unveiled plans to increase their capital by a total of AED 4 billion ($1.088 billion) – including Dubai Islamic Bank (DIB), Emirates NBD, and United Arab Bank (UAB) – Mubasher’s data showed.

Emirati banks and companies seeking to up their capital are eager to benefit from the low-cost finance before the Fed increases the interest rates by over 1% in the coming year, capital market analyst Basel Abu Teima told Mubasher.

In the same vein, other banks issued bonds, among them First Abu Dhabi Bank (FAB), Abu Teima added.

Theses banks’ offerings are expected to be oversubscribed, as they reported positive results in the previous year and, therefore, have lifted their dividends, the financial analyst at Mena Corp Issam Kassabieh commented.

The projected growth in the UAE-based banks would enable them to expand in new activities and comply with Basel III liquidity requirements, the analyst stated.

To be applied by the CBUAE in 2019, Basel III standards protect the banking sector and ensure its stability.

Basel III requirements entail higher liquidity and hedging policies, which require banks to maintain a large capital base.

The real returns of adherence to Basel III standards are higher capital and liquidity, better governance, and lower risk, the partner and head of banking and financing services at Baker & McKenzie Habib Al Mulla Mazen Boustany explained.

 

Translated by: Muhammad Khalid

MUBASHER Contribution Time: 18-Mar-2018 15:50 (GMT)
MUBASHER Last Update Time: 18-Mar-2018 15:50 (GMT)