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Banks

UPDATE 2-Bahrain Islamic plans $143 mln rights issue

* Says to conduct 100 fils per share rights issue

* Rights issue could sell up to 3 new shares for 4 held

* Priced at a 37 percent discount

(Adds target amount, background on regulations)

By Frederik Richter

MANAMA, July 13 (Reuters) - Loss-making Bahrain Islamic Bank BISB.BH plans to raise up to $143 million in a rights issue at a 37 percent discount, the first time a major Bahraini retail bank has sought fresh capital since the financial crisis.

Bahrain Islamic’s shares, which rarely trade on Bahrain’s stock exchange, closed at 159 fils on Monday. The issue was priced at 100 fils and will be offered on the basis of up to three new shares for every four held.

“We plan to raise up to 75 percent of our paid-up capital which is about 72 million Bahrain dinars ($191 million),” Chief Executive Mohammed Ebrahim Mohammed told Reuters. He declined to elaborate.

Analysts say Bahrain regulations oblige companies to offer new shares at the nominal price of the stock.

The bank, the fifth-largest retail bank in Bahrain, did not say what the money was for. Several Bahraini investment houses have raised capital to shore up their balance sheets after they were badly hit by a regional property crash late in 2008.

Bahrain Islamic posted a full-year net loss of 19.4 million Bahraini dinars for 2009 and a 6.9 million loss for the second quarter of this year.

The lender, in which the Kuwait government holds a controlling stake, has a market capitalisation of about $307 million.

The bank said in an earlier statement to the stock exchange that the shares would be offered to existing shareholders only.

There are 1,000 fils to the Bahraini dinar.

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