Farayand Virtual World

*Central Bank approves Dubai Bank capital hike

Dubai Bank, the banking subsidiary of Emaar Properties, has got Central Bank approval to increase its capital to Dh500 million from Dh300 million.

Ziad Makkawi, CEO, told Gulf News that Emaar has already brought in the money in the form of time deposits, and this is now likely to be converted into the bank's share capital.

The bank is also working on the launch of Islamic banking products, which are in good demand in this region, and it will not be long before a dedicated division will be set up for these products. "We will have some interesting and innovative products."

Though it does not have a separate investment banking division, Makkawi said it has already concluded investment banking deals worth approximately Dh400 million in the recent past.

Dubai Bank, being a public joint stock company, will have to get listed on one of the official stock markets by May 2005 as per the new regulations. Makkawi said his bank will comply with the regulations before the deadline.

On the capital market scenario, he said the UAE will see more companies coming forward with initial public offerings (IPOs) in the near future. But he was critical about the high leveraging facility being offered by banks.

The last year saw several banks substantially increasing their capital through different ways - issue of bonus shares, rights issue, bonds, etc. They include Bank of Sharjah, which trebled its capital through a rights issue, First Gulf Bank, RakBank and Emirates Bank International (EBI).

Projects worth billions of dirhams including mega property projects are in the line-up for execution in the GCC, especially in the UAE, and financing is likely to get a big boost in coming months.

The clause that banks in the UAE cannot finance projects sized more than seven per cent of their equity forces them to increase their capital if they want to be in the running for larger projects.

(Source: Gulf News)