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EIIC not to reap earnings on ADIB's deal

ABU DHABI — Emirates International Investment Company (EIIC) said it would not reap earnings on the Dh1.5 billion convertible sukuk which it intends to purchase from Abu Dhabi Islamic Bank (ADIB) to increase its shareholding in the bank.

The company said its investment decision seeks to boost the ADIB's capital adequacy ratio, secure more cash liquidity for financing and investment and allow the bank to increase its profits and dividends. It will also boost investor's confidence in the bank and stabilise prices of its shares on the stock market. The earning for the said sukuks is estimated at Dh100 million, a year on LIBOR average yield.

The EIIC said that the conversion of sukuk into shares would include issue fees which will be added to the nominal share value as decided by the ADIB's general assembly.

The Abu Dhabi investment company currently owns 37 per cent shareholding of the ADIB and the convertible sukuk will raise the company's stake in the bank to about 55 per cent.

The company said the shares it would get after the conversion of sukuks would not be traded for five years, so as to cushion the share prices and ensure liquidity of the shares in the market.

The value of free of charge sukuk will bolster the bank's financing power and widen its reach-out at local, regional and international markets amid the growing demand for Islamic banking services and financing.