Bahrain’s Arab Banking Corporation (ABC) has said it will increase its paid up capital by $500m through a rights issue, following $250m of provisions related to investments hit by the US subprime crisis.
At an annual general meeting in Bahrain on 26 March, the bank said it planned to increase its authorised capital from $1.5bn to $2bn through a rights issue to existing shareholders.
The bank made a profit of $125m in 2007, down from $202m in 2006 because of the subprime related provisions. The new capital injection will come from the bank's three main shareholders, the Kuwait Investment Authority, the Central Bank of Libya and the Abu Dhabi Investment Authority.
ABC will also issue $500m of subordinated debt to its three shareholders to fund their purchase of the new shares. This debt will be junior debt, which means that if the bank is liquidated it will be the last of the bank’s debt to be repaid.
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