(Adds chairman, capital conversion approval, background)
By Raissa Kasolowsky
DUBAI, March 25 (Reuters) - Emirates NBD is open to getting government support, its chairman said on Wednesday, as the Dubai lender looks to raise $1 billion to meet capital adequacy ratios required by the central bank.
"Why not? Banks all over the world got support from their government ... it's normal," Ahmed al-Tayer, chairman of the region's largest bank by assets, told reporters.
"We haven't discussed the conditions yet." Banks in the United Arab Emirates, the world's fifth-largest oil exporter, have posted weaker-than-expected fourth-quarter profits due to provisions for bad loans and writedowns on investment losses as the once-booming region suffers the fallout from the global financial crisis.
The UAE central bank has told banks to up their capital adequacy ratio to a minimum of 11 percent by June 30, and to a minimum of 12 percent by June 30, 2010.
Chief Financial Officer Sanjay Uppal was quoted this week as saying the lender's Tier 1 capital adequacy ratio stood at 9.4 percent.
Uppal told Reuters this week the lender would raise about 3.5 billion dirhams ($952.9 million) this year to meet its 2009 target.
"It will be in debt form," Uppal said on Wednesday, declining to say whether the Dubai or UAE government would be involved in the transaction.
The lender will raise about 3 billion dirhams next year to meet 2010 targets, Uppal said.
Bank shareholders approved the conversion of $1.72 billion of UAE government deposits into Tier 2 capital as part of a larger programme sponsored by the Ministry of Finance in 2008 to boost liquidity in the banking system.
Tier 1 capital includes common stock retained earnings and perpetual preferred stock, and its capital adequacy ratio -- the ratio of a bank's capital to risk -- is used to identify how well a bank can absorb losses.
Emirates NBD posted a 98.8 percent plunge in fourth-quarter net profit as it booked steep mark-to-market losses and said it expected bad loans to rise this year.
The bank reported writedowns and impairments of 2.26 billion dirhams last year -- the key reason behind a 7 percent decline in full-year net profit to 3.7 billion dirhams.
The bank has about $1.6 billion of medium-term debt maturing this year.
Tier 2 capital is a bank's secondary capital and includes items such as subordinated term debt. It protects depositors once Tier 1 capital value has elapsed. (Reporting by Raissa Kasolowsky; Writing by John Irish and Firouz Sedarat; Editing by Andrew Macdonald) ($1=3.673 dirhams)