Dubai Banking Group issues statement regarding SHUAA Capital

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Dubai Banking Group (DBG), which is involved in a very public spat with one of the UAE’s best known investment banks Shuaa Capital, has announced it will pursue legal proceedings to recover a loan amount issued to Shuaa Capital in 2007. Shuaa Capital last week attempted to convert the amount into 250 million shares, which was promptly rejected by DBG. Registration of the shares has been indefinitely blocked by regulators, pending a resolution.

“Dubai Banking Group has made several attempts to amicably resolve the matter of SHUAA Capital’s bond issue. We believe that our proposals were in the best interest of both parties.

Since it has become clear that a resolution is not possible at this time, we have no choice but to pursue litigation in order to redeem our original investment in the company and other amounts outstanding including interest, in accordance with the terms of the Note, ancillary documents and the UAE Companies Law No 8 for 1984,” said Fadel Al Ali, Chairman of Dubai Banking Group, in a statement emailed to the press earlier Tuesday.

Earlier in the day, credit ratings agency Moody’s announced it was downgrading Shuaa Capital by three levels, because of the uncertainty surrounding the dispute with DBG. Shuaa Capital’s share price plunged 9.22 per cent to close on Dh 1.29. Moody’s new rating for Shuaa Capital is now B1, down from Ba1subject to high credit risk, and poor credit quality and has placed the company on review for further downgrade.