Saudi bank, in which Pakistan has stake, proposes 30% capital rise

Bank AlJazira will raise capital from 4b to 5.2b riyals

RIYADH: Bank AlJazira, one of Saudi Arabia’s smaller banks, plans to raise its capital by 30% through a bonus share issue, it said on Thursday.

The bank said the capital increase to 5.2 billion riyals from 4 billion riyals ($1.07 billion) would be completed by issuing three new shares for every 10 shares held, paid for by capitalising 1.2 billion riyals of retained earnings.

No money is being raised from shareholders, who are getting the new shares for free, but the share issue effectively boosts the bank's equity and therefore supports future lending.

The bank, in which the government of Pakistan has a 5.8% stake, said the move required the approval of shareholders.

Bank AlJazira in January reported a 4.4% drop in fourth quarter net profit.