The agreement will also see the maturity date of the existing $200 million subordinated loan raised in 2006 extended from 2016 to 2018, thereby increasing its capital effectiveness for AUB.
IFC Capitalization Fund’s investments in Ahli United Bank will provide long-term capital resources to the Bank as it expands regionally, and will strengthen its capital funding base in anticipation of the Basel III requirements coming into effect in 2013. The IFC and the IFC Capitalization Fund aim through these investments which represent the IFC Capitalization Fund’s first in the MENA region to fulfill their mandate in supporting banks deemed vital to the financial system of emerging markets and to facilitate and promote greater regional economic and financial integration.
“AUB is very pleased to expand and diversify its banking partnership with IFC and the IFC Capitalization Fund in a landmark capital raising transaction which will have a major impact on its regional growth and business development. IFC has proved to be a reliable strategic partner especially in these challenging times,” said Adel El-Labban, Group CEO and Managing Director, Ahli United Bank.
“This deal is unique and distinctly significant in more ways than one. In size, it represents the largest investment by any international body in a financial institution anywhere in the region. In timing, it comes as a strong vote of confidence by the international financial community in the soundness, strong fundamentals and future outlook not only of AUB but of the financial sector in Bahrain and the region at large in these challenging times. More significantly, this deal demonstrates AUB’s success in mobilizing capital funding at optimal cost and in structuring a sophisticated mix of Tier I and Tier II capital, in a manner similar to its major OECD counterparts”, added El-Labban.
“The Capitalization Fund’s investments will support Ahli United Bank during a challenging time for markets in the Middle East and North Africa region,” said Marcos Brujis, who heads the IFC Capitalization Fund. “We look forward to facilitating the bank’s expansion and growth throughout the region.”
“The expansion of Ahli United Bank will support trade, financial flows, and provide access to finance for underserved segments of society in the region’s frontier and emerging countries,” said Rashad Kaldany, IFC Vice President for Asia, Eastern Europe, Middle East and North Africa. “IFC and IFC Capitalization Fund’s support for a regional champion and longstanding partner in development like AUB demonstrates our confidence in the fundamentals of economies in the Middle East and North Africa region.”
The IFC Capitalization Fund is a global equity and subordinated debt fund founded by the International Finance Corporation, a member of the World Bank Group, and the Japan Bank for International Cooperation. It aims to support banks considered vital to the financial system of emerging market countries.