NBAD staff to get convertible bonds

The National Bank of Abu Dhabi (NBAD) has approved the issuance of convertible bonds to its employees and set a conversion price of Dh19.20.

NBAD's General Assembly, which held an extraordinary meeting last week, endorsed the bank's proposal to issue the bonds and asked its Board to outline terms of the issue and name the beneficiaries, the NBAD said yesterday.

"The bonds will have a conversion price of Dh19.20, which is subject to modification depending on any increase in the bank's capital provided that the total value of those bonds does not exceed 2.5 per cent of the capital," the statement said, adding that NBAD would start issuing the bonds from July 2011.

The Government-controlled bank, one of the largest five banks in the Middle East in terms of assets, is also planning to raise its capital but has not specified a date.

Dealers said the issue could exceed Dh50 million on the grounds NBAD's capital is expected to increase within five years as part of an ongoing strategy to enhance its financial position and expand operations inside and outside the UAE.

The bank has been locked in a wave of convertible bond issues to boost its capital, the latest of which was in April. The increase by around Dh329m pushed up the Bank's capital to a record Dh1.97 billion at the end of May.

"This new bond issue is a sort of incentive for long-serving employees to acknowledge their service and at the same time encourage them to stay with the bank," said Mohammed Yassin, Director of the Emirates Securities Company.

The incentives for the staff follow a surge in NBAD's profits and plans to penetrate new markets, including Libya.

NBAD's balance sheet showed its net profit leaped by 45.4 per cent to Dh874.5m in the first quarter of 2008 compared with the same period of 2007.

The earnings jumped by around 19 per cent to a record Dh2.5bn in 2007. Total assets jumped by 41 per cent to Dh157bn at the end of March.

The number

45.4%: NBAD's net profit increase to Dh874.5 million in Q1 of 2008 as compared to Q1 2007