$200 million shares
Bank converts $27 million
earnings into capital
BLOM Bank said it has redeemed and canceled 20 million preferred shares by buying them back at their issue price of $10 per share.
This operation has resulted in a decrease of $200 million in the bank’s total shareholder’s equity, which stood at $2.95 billion at the end of 2016.
BLOM Bank is overcapitalized and has ample liquidity and does not need to keep these shares, said Tala Baba, the bank’s Assistant General Manager and Chief Financial Officer.
BLOM’s current capital adequacy ratio of 18.5 percent is among the highest in the country.
The stock redemption allows the bank to save the dividends it pays annually to holders of the preferred shares which were issued in 2011. These dividends totaled $14 million last year.
Baba said that BLOM will also convert retained earnings into share capital to raise it to nearly $214 million from $187 million at the end of 2016.
“This operation will not have any impact on total shareholders’ equity as it is a transfer from one equity item to another,” he said.
The bank has 215 million common shares listed on the Beirut Stock Exchange (BSE). It also has Global Depositary Receipts (GDRs) traded on the London Stock Exchange.
Reported by Shikrallah Nakhoul
Date Posted: Jun 09, 2017