ADCB to net $272 mln in profits from RHB stake sale

ADCB to net $272 mln in profits from RHB stake sale

ADCB sold its 24.9 percent stake in RHB to Aabar; Says funds to be used to strengthen balance sheet; ADCB shares rise 2.5 percent on Abu Dhabi bourse - reuters

June 19, 2011 10:27 by p.deleon

Abu Dhabi Commercial Bank (ADCB) will record a net profit of 1 billion dirhams ($272.3 million) from the sale of its 25 percent stake in Malaysian lender RHB Capital , the lender said on Sunday.

ADCB signed an agreement to sell its percent stake in RHB Capital to Aabar Investments, an Abu Dhabi investment fund, for 10.80 ringgit per share, bringing in 7 billion dirhams ($1.91 billion).

“After considering all related costs… exchange rates, hedging, cost of funding etc… this transaction shall contribute approximately 1 billion dirhams to the bank’s overall profit,” ADCB said in a bourse statement.

The lender, one of the region’s most exposed banks to indebted conglomerate Dubai World, said it will use proceeds of the stake sale to bolster its balance sheet and will help the bank focus more on its local markets.

Consideration for the sale will be settled in cash, one month from the date of signing the agreement, ADCB said.

RHB, Malaysia’s fifth-largest lender with a market value of about $7.2 billion, is presently a takeover target of Malaysia’s two largest banking groups, CIMB Group and Malayan Banking (Maybank) .

Analysts have said the sale to Aabar could complicate a merger bid between RHB and either CIMB or Maybank as it set the floor for the RHB takeover, pricing RHB at a minimum 2.25 times book value. RHB’s book value was 4.79 ringgit per share as of March 31.

Shares in ADCB gained 2.2 percent amid low volumes in Abu Dhabi trade as at 0700 GMT. ($1=3.673 UAE DIRHAM) (Reporting by Dinesh Nair, Editing by Reed Stevenson)