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Emirates NBD seeks $2B capital hike as it plans bid for Turkey's DenizBank

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Emirates NBD seeks $2B capital hike as it plans bid for Turkey's DenizBank

Shares in Emirates NBD Bank PJSC rose March 11 after the lender unveiled plans to boost its capital by up to 7.35 billion United Arab Emirates dirhams, or roughly $2 billion.

The Dubai-based bank, which is said to be preparing a bid for PAO Sberbank of Russia's Turkish unit DenizBank AS, is seeking shareholder approval to offer new shares with a nominal value of 1 dirham per share at a subscription price per share of no less than a 10% discount to the prevailing market price.

The capital increase is meant to ensure that the UAE lender's common equity Tier 1 ratio will not fall below the required minimum of 11% with the potential acquisition, Reuters reported, citing SICO Bahrain banking analyst Chiradeep Ghosh. Emirates NBD Bank's Basel III CET1 ratio stood at 16.4% at the end of 2017.

The bank is also planning to increase its foreign ownership limit to 20% from 5%, Bloomberg News reported.

A change in foreign ownership limit at the UAE lender may result in its inclusion on MSCI's emerging markets index, Arqaam Capital said in a research note, the newswire said. Arqaam said the earliest window for the possible inclusion is November, and it should lead to passive inflows to Emirates NBD of approximately $210 million, according to the report updated March 12.

The proposals will be discussed at a general meeting of shareholders on March 27.

The company's shares closed at 10 dirhams March 11, up 13.64% from the previous closing price.

As of March 9, US$1 was equivalent to 3.67 United Arab Emirates dirhams.