Dubai-based Emaar Properties clarified today that with Dubai government taking over Dubai Bank with immediate effect earlier this week, the real estate company, which had a 30 per cent stake in Dubai Bank, will write off its investment in the bank in the second quarter of the year.
“The value of Emaar’s investment in Dubai Bank as at March 31, 2011, was approximately Dh172m, which is approximately 0.3 per cent to Emaar’s total assets and 0.56 per cent of its total equity at the end of first quarter of 2011,” the company said in a statement posted on the Dubai bourse’s website.
“The value of this investment will be written off during second quarter 2011,” it added.
The Dubai government announced on Tuesday that it has taken over Dubai Bank with immediate effect “to ensure the preservation of all of Dubai Bank’s Depositors interests”.
“The Government of Dubai will immediately make adequate capital injection into Dubai Bank, thereby taking over the bank,” a statement issued by the Dubai Government Media Office had said.
The injection effectively diluted the complete holding of Dubai Bank’s current shareholders, and consequently allowed the 100 per cent takeover of the bank by the Government of Dubai. Before the acquisition, Dubai Bank was jointly owned by Dubai Holding and Emaar at 70 and 30 per cent, respectively.
The statement further clarified that the intervention is designed to ensure that Dubai Bank’s business continues uninterrupted while options for the bank’s future, whether to be run on a stand-alone basis or be potentially merged with another bank in which the government has ownership, are being assessed.
The Central Bank of the UAE and the Ministry of Finance extended their support to Dubai Governments’ initiative.
The management team at Dubai Bank will not be affected by the takeover and will remain in place without any changes, the statement said.