"Dubai Banking Group ... elected not to convert the note but rather to redeem the notes at its principal amount," it said in a statement posted on the bourse website.
"We will not accept the delivery of the conversion shares issued by Shuaa Capital in contravention of our election ... we have issued Shuaa Capital with a notice of redemption of the note for its principal amount and have demanded payment of the principal amount and other amounts payable under the note," it said.
Investment bank Shuaa Capital has issued 250 million new shares to DBG, making the group a 32 per cent shareholder in Shuaa.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.