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BCC Group Annual Report & Accounts
Notes to the Consolidated Accounts 31 December 1990 : Financial Support and Basis of Preparation of Accounts
In April 1990 it was announced that the Government of Abu Dhabi had acquired a major holding in the company and had subscribed new capital of $ 400 million; as a result of this, the Government of Abu (Dhabi, together with related institutions, held a controlling interest and it confirmed its intention to maintain the capital base whilst the reorganisation and restructuring necessary for the continued development of the Group was undertaken.
Pursuant to this, the Government of Abu Dhabi has entered into financial support arrangements with the Group. As pan of these arrangements the economic interest in certain balances included in Loans and Other Receivables at December 31, 1990 amounting to $ 2,908 million and in further balances of $ 153 million included in Due From Banks at December 31, 1990 has been taken over by companies controlled by the Government of Abu Dhabi. Income of $ 230 million in respect of these balances has been included as interest income in the Consolidated Statement of Earnings. Promissory notes denominated in US Dollars and UAE Dirhams, equivalent in face value to $ 3,061 million, have been issued by the Government of Abu Dhabi to Group, companies in return for the balances taken over. A guarantee of $ 750 million has also been provided by the Government of Abu Dhabi in respect of further customer balances at December 31, 1990 which have been transferred in a similar manner to a wholly owned subsidiary for realisation. These arrangements came into effect on May 22, 1991, but provide for the Group to receive the benefit of the / transactions concerned as if they had become effective on December 29, 1990. By way of further financial support. on July 4, 1991 the Government of Abu Dhabi subscribed the equivalent of $ 650 million of new preference capital in a subsidiary company. An adjusted Consolidated Statement of Condition is presented to show the effect of these financial support arrangements. Further specific funds have been committed by the Government to support the proposed reorganisation and restructuring of the Group.
Since April 1990 the controlling shareholders have brought about Board and management changes and instigated the major reorganisation and restructuring of the Group described above. This involves the divestment of all the Group's banking activities, principally by disposal on a going concern basis to the shareholders or to third parties, with an orderly rundown of any remaining businesses. Detailed discussions have been held with regulators and other parties about the divestment programme some parts of which may take several years to complete. The accounts have been drawn up on a going concern basis having regard to the financial support of the Government of Abu Dhabi referred to above and on the assumption that the restructuring plans will be approved by the appropriate regulatory authorities. The Directors have no reason to believe that these approvals will not be given.