April 10, 2019 / 11:43 AM / 4 months ago

UPDATE 1-Invest Bank shareholders approve Sharjah government as controlling shareholder

(Adds details, changes sourcing)

By Nafisa Eltahir

SHARJAH, United Arab Emirates, April 10 (Reuters) - S hareholders of Invest Bank have approved a proposal to hand the Sharjah government a 50.07 percent stake in the lender and allow it to merge with one or more other banks without a vote.

The government of Sharjah, the emirate where Invest Bank is based, stepped in late last year after the central bank ordered the lender to take losses that wiped out its capital base.

The government promised to support the bank after it was hit by high levels of bad loans, partly due to its exposure to the troubled real estate and construction sectors.

The Sharjah government made the 1.115 billion dirham ($303.58 million) investment on a commercial basis, Invest Bank said in a statement on Wednesday. It has also offered to subscribe to a future rights issue.

“We’re happy with the government participation because it will help address the issues,” said shareholder Anastasios Dalgiannakis, managing director of Creek Capital.

“But at the same time we will remain vigilant when it comes to merger candidates,” he added.

Reuters reported earlier this week that preliminary merger talks had been revived, although it was unclear whether any deal would be between Bank of Sharjah and Invest Bank , or if the two would be joined by United Arab Bank.

A tie up would add to the list of Gulf banking mergers seen in recent years.

The meeting of Investbank’s shareholders lasted only about half an hour and all items on the agenda were ratified, sources said.

Shareholders also approved an increase in share capital to 6.3 billion dirhams ($1.72 billion), to be partly underwritten by the Sharjah government with details and timing to be determined at a later date.

It named Sheikh Sultan bin Ahmed bin Sultan al-Qasimi as chairman of the board of directors. ($1 = 3.6728 UAE dirham)

additional reporting by Hadeel Al Sayegh; Editing by Saeed Azhar and Kirsten Donovan

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