The Abu Dhabi government said on Wednesday it has decided to inject additional liquidity into five of its banks through capital notes to bolster confidence in the financial system as the global crisis bites.

Under this initiative, the Government of Abu Dhabi will subscribe for Tier I capital notes issued by each of the five financial institutions, with a total aggregate principal amount of Dh16 billion ($4.36 billion). 

The notes will be non-voting, non-cumulative perpetual securities, and will be callable subject to certain conditions.

'Given the current global economic conditions, the government believes that this strategic initiative is an appropriate and proactive response to ensure that the strong confidence in Abu Dhabi's financial institutions is further enhanced,' it said in a statement.

The five banks are: Abu Dhabi Commercial Bank, Abu Dhabi Islamic Bank, First Gulf Bank, National Bank of Abu Dhabi and Union National Bank.

Hamad Al Hurr Al Suwaidi, member of Executive Council and undersecretary of the Abu Dhabi Department of Finance, said: 'The Government views this capital injection into the banking system as an important step to allow Abu Dhabi financial institutions to remain strong and well-capitalised compared to international peers, and fulfil their role in achieving the government’s vision for the Abu Dhabi economy.' 

JP Morgan acted as structurer and arranger of the notes, with Clifford Chance providing legal advice to the government of Abu Dhabi and JP Morgan. - TradeArabia News Service/Reuters