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Bank of Sharjah to raise capital by three times

DUBAI Bank of Sharjah is going to raise its capital by almost three times with a rights issue next month. The bank’s shareholders on Saturday also approved the board’s decision to distribute a cash dividend of 12 per cent and a bonus issue of 12 shares for one share that would raise the capital of the bank from Dh240 million to Dh260 million.

Officials of the bank attributed Bank of Sharjah’s decision to raise its capital by threefold to the increasing demand from globalisation, which would see greater competition coming into the local and regional markets soon.

The rights issue, which will offer two shares for every one share held, will raise the capital of the bank from Dh260 million to Dh750 million. They rights issue will be at par, while a small part of the issue, which is likely to be renounced by the existing shareholders, would be offered to the open market at a premium with the highest bidder getting the unsubscribed portion, the officials said.

The bank also announced a 17.7 per cent rise in its net profits for the year 2002 to Dh59 million. Total assets were up 15 per cent over the previous year at Dh2.22 billion, while total facilities increased Dh1.32 billion. The bank’s deposits also climbed up 17 per cent to reach Dh1.75 billion.

Ahmad Abdullah Al Noman, chairman of Bank of Sharjah, said: “I am pleased to say that 2002 was an excellent year for the bank, both in terms of growth and performance. Despite the gloomy economic outlook of the world, the UAE was able to limit the negative repercussions of the developments during the year. The country also succeeded in portraying an image of prosperity and provided a shelter to potential investors seeking opportunities for growth.”

But he added that the current tense political environment is not helping the cause of business and economy and any drastic economic revival should not be expected in the foreseeable future.

Al Noman also said that BNP Paribas, which held substantial equity in the Bank of Sharjah, has sold out all its stake to the existing shareholders in 2002 because of UAE laws that do not allow foreign banks to own more than 20 per cent in a national bank.

“Following the completion of the sales transaction, the share of the bank has witnessed a lot of activity, which has pushed the share price above the Dh30 level,” he pointed out.

The chairman said that Bank of Sharjah has retained strong working relationship with BNP Paribas and the foreign bank is still providing the administrative and managerial support to the local bank. “I would like to express our appreciation to the monetary authorities of the UAE, specially the Central Bank, and to our customers and correspondents, specially BNP Paribas and to management and staff of the bank for their service and devotion,” he said.