Abu Dhabi injects Dh16bn into five banks

The Government of Abu Dhabi yesterday announced it will provide five local banks with Dh16 billion Tier I notes to increase liquidity in a move to help protect the local economy from the current global credit crunch crisis.

The government will subscribe to Dh16bn Tier I capital notes by the five banks – National Bank of Abu Dhabi (Dh4bn), Abu Dhabi Commercial Bank (Dh4bn), First Gulf Bank (Dh4bn), Abu Dhabi Islamic Bank (Dh2bn) and Union National Bank (Dh2bn).

The capital injection is expected to provide a cushion for losses. The National Bank of Abu Dhabi, the capital's biggest lender by assets, will sell Dh4bn of notes paying the government six per cent annual interest for five years and a floating rate thereafter. ADCB and FGB will also receive Dh4bn each by selling notes that increase their Tier-1 capital and cushion senior bondholders and depositors against losses. UNB and ADIB will each get Dh2bn each.

"The government views this capital injection as an important step to allow Abu Dhabi financial institutions to remain strong and well-capitalised and fulfill their role in achieving the government's vision for the Abu Dhabi economy," said Hamad Al Hurr Al Suwaidi, member of Executive Council and Undersecretary of the Abu Dhabi Department of Finance.

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