Bahrain's Ithmaar Bank in $400m capital hike

Bahrain-based bank Ithmaar is launching a $400m capital raising plan to fund expansion, it said in a statement on Thursday.

As part of the hike, the bank will raise up to $200m by selling shares at $0.25 to existing shareholders between March 16-March 25, it said. The bank will also sell a mandatory convertible Islamic bond.

"We decided the size of the offering after carefully considering various factors, including the bank's reorganisation plans and our long-term strategy," said Chief Executive Mohamed Hussain.

"The capital generated from this offering will be used, mainly, to implement our immediate strategic objectives," he said.

Ithmaar is trying to recapitalize after posting a $235m loss for 2009 due to bad loans and lower asset valuations. It also plans to convert itself into a retail bank by integrating its fully owned Shamil Bank, a Bahraini retail bank.

Ithmaar has appointed Shamil as the receiving banking and KPMG as the issue registrar, it said.

Debt capital markets in the Gulf Arab region have remained mostly shut to the private sector over the past months, as confidence has been hit by corporate defaults and the debt crisis in Dubai, the region's business and tourism hub.