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Monday, 22 June 2009

Fears of D1.5bn penalty hits Shuaa shares

Shuaa Capital, the investment bank embroiled in a public row over a Dh1.5 billion (US$408.6m) convertible bond, called on the market regulator Sunday to avoid pre-judging its dispute with the Dubai Banking Group (DBG), as the pair moved closer to a legal confrontation.

The statement sent Shuaa’s shares down by 9.8 per cent in Dubai yesterday.
“I think investors overreacted a bit. But they clearly fear that the bank may have to pay back the Dh1.5bn to DBG. Should Shuaa have to pay, it would really hurt them,” said Shawkat Raslan, the head of sales at Prime Emirates, the brokerage owned by Prime Holding of Egypt.

In a letter addressed to the Emirates Securities and Commodities Authority (ESCA), Shuaa said the questions over the bond “required very careful conside­ration and must ultimately be addressed as matters of law and public policy”. ESCA posted the letter on the website of the Dubai Financial Market Sunday.

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