The government of debt-laden Dubai announced Monday it is taking over its troubled Islamic lender Dubai Bank, pledging to inject adequate capital into the loss-making lender. "The government of Dubai will immediately make adequate capital injection into Dubai Bank, thereby taking over the bank," it said in a statement.
"The government of Dubai emphasised that it has decided to act swiftly to ensure the preservation of all of Dubai Bank''s depositors interests," it added, without specifying the value of the capital injection. The government said the takeover would ensure that Dubai Bank''s business continues uninterrupted. The bank posted a net loss of 290.6 million dirhams ($79.2 million) in 2009, in the last financial results made public.
Before the takeover, Dubai Bank was jointly owned by Dubai Holding, with a 70-percent stake, and Emaar, with 30 percent. Dubai Holding is a diversified group owned by the ruler of Dubai, Sheikh Mohammed bin Rashid al-Maktoum, while parts of it are being restructured to sort their debt burdens. The southern Gulf emirate, a regional business, leisure and tourism hub, rocked global financial markets in November 2009 when it announced a freeze in debt repayments by Dubai World, its largest group. But it has since then reached an agreement with lenders to restructure $14.7 billion of debt.