Abu Dhabi Commercial Bank PJSC, the United Arab Emirates’ third-biggest bank by assets, plans to convert 6.6 billion-dirham ($1.8 billion) of federal government deposits into Tier 2 capital.
The bank plans to seek shareholders approval for the conversion at a meeting on March 31, its Chief Executive Officer Ala’a Eraiqat said in Abu Dhabi today.
The bank received the deposit as part of a government plan announced in October to inject 70 billion dirhams ($19 billion) into local banks to relieve the impact of the global credit crisis.
Tier 2 capital is a bank’s secondary capital and includes items such as undisclosed reserves, general loss reserves and subordinated term debt. It protects depositors after the value of Tier 1 capital has eroded. Tier 1 consists of items such as common stock, retained earnings and perpetual preferred stock.
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