The UAE Central Bank on Sunday said it was closely monitoring financial developments at Sharjah’s Invest Bank after the emirate’s government said it would take a majority stake.
The state intervention comes after Invest Bank was hit by high levels of bad loans linked in part to exposure to the troubled real estate and construction market, according to Reuters.
Invest Bank said its board of directors would recommend a capital injection by the Sharjah government, which would make the emirate its majority strategic investor.
The size and value of the stake was not disclosed.
Following the announcement, the UAE Central Bank said it had been working with the bank and Sharjah government for some time to strengthen its capital base.
“In this regard, the Government of Sharjah, is firmly committed to support the bank via a direct equity investment and this plan will be presented at the bank’s AGM scheduled for the 29th December 2018 for approval,” according to the statement.
“In the meantime, the CBUAE will support Invest Bank with all the available liquidity facilities, which remain at Invest Bank’s disposal; if, and when, needed.”
Reuters reported in September that the Sharjah government was considering a potential merger between Invest Bank, Bank of Sharjah and United Arab Bank to create a bank with about Dhs66.2bn ($18.0bn) of assets.
However, the three lenders denied talks were taking place.