The government of the United Arab Emirate of Sharjah will take a majority stake in struggling Invest Bank, the lender said on Friday, in a move it said would help ensure its future growth. Invest, one of the smaller banks in the UAE, has been hit by recent high levels of bad loans, partly due to its exposure to the troubled real estate and construction market.
The lender, currently 15.5 percent owned by Sharjah-based International Private Group, said its board of directors will recommend a capital injection by the Sharjah government which will make it a majority strategic investor in the lender. It did not give details of the size of the stake, or the value of its investment. "Invest Bank and the government of Sharjah consider that the latter's injection of capital is the best option to enable the bank to continue to grow and prosper," the bank said in an emailed statement. The investment is subject to regulatory and shareholder approvals, it added.
The bank did not say whether the investment was linked to a potential merger between Invest Bank and Bank of Sharjah, in which the government holds a 17.2 percent stake. Merger talks between Bank of Sharjah and Invest Bank began last year, sources told Reuters at the time. Reuters also reported in October that the Sharjah government was weighing a potential merger between those two banks and another Sharjah-based lender, United Arab Bank (UAB).
Invest Bank and UAB have both denied the report. The Sharjah government's investment in Invest Bank will be made on a commercial basis, Invest Bank said. The government is the largest shareholder in Sharjah's banking sector.
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