First Gulf Bank's (FGB) board of directors voted yesterday to cut by half the foreign holding of its shares, saying speculators have driven down the price of its stocks. The shares closed yesterday at Dh8.80 (US$2.39), having dropped by more than one third from a high of Dh29.05 in early July. They were trading at Dh23.15 on Aug 31, when most other bank shares also started declining.
The FGB board voted to limit foreign ownership of the bank's shares to 15 per cent, from 30 per cent. "The decrease in the share price was in majority attributed to short-term foreign speculators who took advantage of market nervousness," said Sheikh Hazza bin Zayed Al Nahyan, the bank's chairman. In May, when the housing market was at the height of its boom and the country's credit crisis was still months from taking shape, a note by Al Mal analysts said FGB was a good choice for investors because of its exposure to retail loans and the property sector.
Its shares rose, but as the housing market declined, FGB's stock price started to fall, along with those of other lenders. mjalili@thenational.ae
