Commercial Bank of Dubai capital raising plans on hold

Commercial Bank of Dubai (CBD) was unable to gain shareholder approval for its proposed capital raising.

The bank held a General Assembly Meeting to consider and approve the Special Resolution proposed by the Board of Directors, relating to the issuance of Tier 1 Capital Perpetual Securities with a total amount of up to $750 million.

The meeting was held on 13 September 2015. CBD required the assent of 75 per cent of votes to press on with the issuance.

However, the Special Resolution was rejected by 39.24 per cent of the shareholders present at the meeting. CBD will, therefore not be going ahead with the capital raising exercise.

As at end-June, CBD’s capital adequacy and Tier 1 Capital ratios were at 17.9 per cent and 16.7 per cent respectively and were significantly above the regulatory thresholds of 12 per cent and 8 per cent mandated by the UAE Central Bank.
Leverage Ratio as per Basel III guidelines was 12.7 per cent against regulatory requirements of three per cent minimum (Dec-13: 13.04 per cent).
The Investment Corporation of Dubai (the emirate’s ‘sovereign wealth fund’) holds a 20 per cent stake in CBD. The next largest shareholder is Al Futtaim Private Company with 10.51 per cent.
Commenting on the outcome to Reuters, John Tuke, Head of Treasury at CBD, suggested that perhaps the bank’s shareholders felt ‘we could delay for a while’ as a result of question marks over the capital markets and the broader economic outlook.

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