NBAD proposes a novel capital increase

The proposal will be submitted to shareholders at an Extraordinary General Meeting to be held on 22 November 2005 in the bank's Abu Dhabi headquarters. The proposal will be subject to all the necessary approvals.

Under the scheme, NBAD proposes to issue Subordinated Notes up to AED2.5 billion, in tranches over time, which will count as Tier 2 capital resources for the bank. The Notes will contain an option for the Note Holder to convert, at a future date, to NBAD shares at a formula driven conversion price set at the time the Notes are issued.

It will not be mandatory for the Note Holder to convert to NBAD shares, and the Note Holder will have the alternative option to hold the Note to maturity, and receive a quarterly coupon linked to market interest rates. The bank hopes to list the Notes on the Abu Dhabi Stock Market in due course, subject to all necessary consents.

Apart from the Subordinated Convertible Note proposal, three other items are on the agenda of the Extraordinary General Meeting. First, a proposal to double the share capital of the bank but not the issued and fully paid up capital, from 1,000 million to 2,000 million shares. Second, a proposal to permit non-UAE nationals to own up to 25% of the share capital. And third, approval to launch a US$5 billion Medium Term Note Programme.