Abu Dhabi Islamic Bank says it is working on giving international investors access to its shares.
The bank’s chief executive, Tirad Al Mahmoud, said the lender recently started talks with Abu Dhabi officials to tweak property laws so that international investors can buy shares in banks that own property in the emirate.
Unlike conventional banks, Islamic banks heed a proscription against interest by buying the assets of clients seeking finance and letting them buy it back at an agreed markup. That includes retail clients who want mortgages as well as corporate customers.
“There are certain advantages that we don’t want to lose to allow foreign ownership and there is only one advantage that we want to maintain and that is our ability to own land in the emirate of Abu Dhabi,” Mr Al Mahmoud said in an interview at an Islamic banking conference in Dubai yesterday.
“[That] may be compromised if there is a foreign ownership element because the law in the emirate of Abu Dhabi says to own land in the emirate of Abu Dhabi, you have to be Emirati.”
Mr Al Mahmoud said that he has started talks with the economic department in Abu Dhabi on “further refining” the laws on foreign ownership and that the shareholders and board of the bank would be open to allowing international investors once this issue is resolved.
Foreign investors are allowed to buy up to 49 per cent of shares in the country’s publicly listed companies. Many companies, however, have limits that are even lower.
Adnan Chilwan, Dubai Islamic Bank's chief executive, said last week that the time was ripe to re-examine the ownership limits and that the Sharia-compliant lender was considering "amending articles of association". The bank's current limit on foreign ownership stands at 15 per cent.
Mashreq, another Dubai lender, in September increased the limit on shares that could be owned by non-Emiratis to 20 per cent from 0.9 per cent.
mkassem@thenational.ae
