* Emaar's 30 pct stake in Dubai Bank worth 172 mln dirhams
* Dubai government said on Monday it took over Dubai Bank
* Write-off to hit second-quarter profits, says analysts
* Emaar shares fall 0.9 percent
(Recasts, adds share price, analyst comments)
By Shaheen Pasha and Praveen Menon
DUBAI, May 19 Emaar Properties EMAR.DU said it
will write off its investment in Dubai Bank, valued at about 172
million dirhams ($46.8 million), a move expected to further
erode the company's profits in the short-term, analysts said.
The decision comes after the Dubai government announced on
Monday that it would take over the troubled Islamic lender,
thereby completely diluting the holdings of Dubai Bank's current
"We view this clean-up act as positive although pressuring
the second-quarter bottom line and share price performance in
the near term," said a note from CAPM Investment.
Emaar, UAE's largest developer by market value, held a 30
percent minority stake in Dubai Bank, which is about 0.3 percent
of Emaar's total assets and about 0.56 percent of its total
Dubai Bank is wholly-owned by Dubai Banking Group which
itself is 70 percent-owned by Dubai Holding.
"The value of this investment will be written off during
second quarter of 2011," Emaar said in the statement.
The builder of the world's tallest tower had a rough start
to the year with a 45 percent slump in its first-quarter
results, as revenue from its apartment sales declined by over 80
Shares of Emaar fell 0.94 percent on the Dubai bourse
.DFMGI at 0724 GMT.
"In the wider scheme of things, it may not be that
significant....but it will affect the second quarter results,"
said Chet Riley, Nomura property analyst.
The move will however, ensure that the developer returns to
its core business, as it had very little control in the indebted
bank's operations, he said.
"It also means that going forward, as a shareholder, it
would not have to inject any capital into the bank. This will be
taken positively," said Riley.
The developer is in the process of conducting a strategic
review of its foreign operations, which may lead to a greater
focus on its hospitality and retail resort business, sources
told Reuters. [ID:nLDE744198]
Emaar declined to comment.
Dubai, which is struggling to emerge from a debt crisis,
said it will inject an unspecified amount of capital into the
bank and its takeover would protect depositors' interests.
($1=3.672 Uae Dirham)
(Editing by Hans Peters)