First Abu Dhabi Bank (FAB), the UAE's biggest lender by assets, has asked its shareholders to approve a capital raise of up to Dh15 billion, or roughly $4.1 billion. If it goes ahead on the terms announced on Thursday, it would be the largest rights issue in the country's banking history.

The bank's board has approved the plan, which would see FAB issue around 1.11 billion new shares at Dh13.52 each. That price sits 30 per cent below the closing price on 10 November, which works out at roughly Dh19.30 a share.

What the bank is proposing

A rights issue gives existing shareholders the first option to buy new shares, usually at a discount, in proportion to what they already own. Those who subscribe keep their percentage stake. Those who don't see it diluted. In the UAE, the rights themselves are often tradable on the exchange, so investors who prefer not to take up the offer can sell them instead.

FAB expects gross proceeds of about Dh15 billion before expenses. Shareholders will vote on the proposal on 7 December. If they approve, the bank will publish the final terms, including the ex-rights date and the subscription window. FAB expects to complete the fundraising in the first quarter of 2027.

Mubadala backs the plan

The most telling detail may be the stance of the bank's largest investor. Mubadala, the Abu Dhabi investment company, has said it intends to subscribe for its full entitlement. That would keep its holding at 37.9 per cent after the transaction, assuming the issue proceeds on the proposed terms.

For other investors, a committed anchor shareholder usually reduces the risk that a large offering goes undersubscribed. It also signals that the bank's biggest backer sees value in the strategy the money is meant to fund.

Why raise capital now

FAB says the extra capital will help it lend and invest more across its domestic and international markets. Reports on the announcement point to growing demand for financing linked to trade, infrastructure, artificial intelligence and cross-border business.

That reading fits the wider economic mood. Speaking to Bloomberg on the same day, the UAE's Minister of Investment, Mohamed Alsuwaidi, described a pipeline of large infrastructure projects, from new pipelines to expanded port capacity on the eastern coast. He also said the government is opening more sectors to private and foreign capital. Projects of that scale need banks with deep balance sheets, and the size of FAB's proposed raise suggests the lender wants to be at the front of that queue.

A growing trend among UAE banks

FAB is not the first Emirati lender to turn to existing shareholders for fresh capital. Abu Dhabi Commercial Bank set an earlier benchmark in September 2025 with a Dh6.1 billion rights issue, which it described as the largest by an Abu Dhabi-listed company at the time. Sharjah Islamic Bank completed a Dh2.59 billion issue earlier this year, closing the offer on 8 May.

Abu Dhabi Islamic Bank is in the middle of its own. Its Dh1.75 billion offer, priced at a discount of about 28.8 per cent, is open to subscription from 10 to 24 November, with trading in the new shares scheduled from 18 December.

Taken together, these deals show a banking sector that is choosing to fund growth by strengthening capital rather than leaning only on debt markets. FAB's offer is more than twice the size of ADCB's record, which makes it the most closely watched of the group.

What to watch next

Three things will matter in the coming weeks.

The 7 December vote. With a major shareholder already signalling support, approval looks likely, but the outcome is the first formal test.

The final terms. The subscription period and ex-rights date will tell investors how much time they have to decide, and how the rights might trade.

Regulatory steps. Earlier UAE bank raises needed sign-off from the Central Bank and the Securities and Commodities Authority as well as shareholders, so expect the process to follow a similar path.

For ordinary shareholders, the key decision will be whether to subscribe, sell their rights or let their stake dilute. Anyone holding FAB shares should wait for the final terms and consider speaking to a licensed financial adviser before acting.

FAB has not yet said exactly how the proceeds will be split between its home market and its international operations. Those details are likely to emerge as the transaction moves forward.