|12-19-2014, 03:23 PM||#1|
Saudi Hollandi Bank to increase capital share using Bonus Issue
The board of the Saudi Hollandi Bank decided to recommend to the Extra Ordinary General Shareholders Assembly to increase the bank’s capital by 20%.
After having obtained the approval from the involved authorities, the bank will recommend to increase the capital to SAR5,715,360,000 from SAR4,762,800,000 at the assembly that will be held sometime during the first quarter of 2015.
The capital increase of SAR952.6 million ($254 million) will be allotted from retained earnings, and will be implemented by distributing a bonus share for every five shares.
The allocation of the bonus share for shareholders will thereby be at the end of the business day of the assembly.
The bank also said on Wednesday that the board proposed a cash dividend of SAR1 per share for 2014, a figure higher than the SAR0.83 per share paid for 2013.
However, the dividends will not accrue to the bonus shares announced.
The so-called Bonus Issue will not have a positive effect on share prices, but investors will receive extra shares based on the proportion they hold. And accordingly, the share price will adjust.
But considering that Saudi Arabia’s stock market is expected to soar at the start of next year, we expect buying pressure on the share, as investors will benefit from growth of the equity as well as the dividend distribution.
Shares jumped 9.8% on Wednesday after the announcement of the dividend.
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