ENBD to start repaying govt support cash

Dubai, February 2, 2013

Emirates NBD, Dubai's biggest bank, said it will start repaying part of the Dh12.6 billion it received from the government in 2008, after reporting forecast-beating quarterly results.

The UAE's Ministry of Finance placed Dh70 billion ($19.1 billion) with banks to shore up their balance sheets in the wake of the global financial crisis.

The method of support, in the form of capital-boosting bonds sold to the government, are losing their value as they head towards maturity, meaning it's in the interest of the bank to replace them with cash raised in current favourable conditions instead of waiting and having to act more drastically later.

"We will have to do something about it at some point because no bank wants to fall off a capital cliff down the line," Surya Subramanian, ENBD's chief financial officer, told a media call.

While ENBD has yet to repay any of the cash it received, other banks in the UAE have started addressing the bonds, which boost Tier 2, or supplementary, capital.

National Bank of Abu Dhabi, the UAE's largest bank by market value, said on Tuesday it had 3 billion dirhams outstanding at the end of 2012, having repaid Dh2.6 billion in the second half of last year.

ENBD chief executive Rick Pudner said the bank was still awaiting regulatory approvals for its $500 million purchase of BNP Paribas' Egyptian assets and he expected the deal to be completed at the end of the first quarter or beginning of the second.

ENBD on Thursday posted a fourth-quarter net profit more than triple the same period of 2011 on the back of lower impairments and increased non interest income.

The lender, 55.6 per cent owned by state fund Investment Corp of Dubai, made Dh625 million in the three months to December 31, a statement from the bank said, compared with Dh152 million in the same period of 2011.

The result beat the average forecast of five analysts polled by Reuters, who expected Dh484 million.-Reuters

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