FX.co ★ Dubai Government nationalized Dubai Bank

On May 16, 2011 Dubai Government declared the taking over of the Dubai Bank, one of the major banks in the UAE. It is reported by Emirates 24/7 with reference to the press office of Dubai authorities.
The press office statement specifies that these actions were taken in order to protect bank depositors. The UAE Government has also informed that it would invest the significant amount of money in the bank’s capital, but exact sum is not provided.
The Dubai Bank’s activity will not be interrupted due to the merger but the stock market has negatively responded to this news. ArabianBusiness informs that the core stock index of Dubai fell down to 1563 points on May 16 which is the 5-week low.
Dubai Bank was established in 2002. Before the merger, 70% of its shares belonged to the Dubai Holdings, the UAE governmental fund, and 30% - to Emaar, the real estate development company. AFP reminds that last time Dubai Bank disclosed its financial statements in 2009. At that moment the bank reported the net loss amounting to 290.6 million dirhams (79.2 million dollars).
In autumn 2009 the Dubai Government appealed to investors with the request to postpone the Dubai World liability payments, the largest holding in the country, for a half a year.
It caused the panic on the world’s exchanges as investors were afraid of a new financial crisis wave. Dubai World was granted the aid by the Emirates’ ruling family and the Central Bank of the UAE. In May 2010 the holding succeeded to negotiate the 14.7 billion dollars debt reconstruction according to which Dubai World would pay the debt with 5- and 8 years delay.