x Abu Dhabi, UAEThursday 18 January 2018

UAE bank Mashreq might lift foreigners’ share limit – again

Mashreq is raising the percentage of its shares that can be owned by non-Emiratis to 20 per cent from 0.9 per cent – and it might go higher still, says the bank's chief executive, Abdul Aziz Al Ghurair.

Abdul Aziz Al Ghurair, the executive chairman of Mashreq, says the decision to invite foreign shareholders was to boost the liquidity of the back stock. Razan Alzayani / The National
Abdul Aziz Al Ghurair, the executive chairman of Mashreq, says the decision to invite foreign shareholders was to boost the liquidity of the back stock. Razan Alzayani / The National

Mashreq might make a second increase in the percentage of its shares that foreigners can own, the bank’s chief executive said yesterday.

Abdul Aziz Al Ghurair’s comments came the day after Mashreq announced that it had increased the proportion of its shares that could be owned by non-Emirati investors to 20 per cent from 0.9 per cent following approval from the market regulator.

If the change lifts the shares, he said, the limit could be lifted further still.

“If it’s a success we can always consider it,” he said.

Mr Al Ghurair was speaking on the sidelines of Sibos, a transactional-banking conference held in Dubai.

“The majority of banks in the UAE have an average of 20-per-cent foreign ownership,” he said. “So it’s a move that brings us in line with the rest of the banking system. We want to invite foreign shareholders to come and explore the opportunities that the region offers and Mashreq offers.”

The decision to increase the foreign ownership threshold, which has already come into effect, was designed to boost the liquidity of the stock, he said. Before Wednesday’s announcement, the bank’s stock traded on just 13 days during the year to date.

“It’s designed to get more people trading, to boost liquidity, and for the benefit of the shareholders,” Mr Al Ghurair said. “It’s part of the opening up of the system in the UAE, being more open to international investors, including publicly traded companies.”

The Al Ghurair family holds a controlling stake of 70 per cent, while 20 per cent are free float, according to Bloomberg data.

The bank did not actively sound out foreign investors before taking the decision to raise the threshold, but investors had previously made inquiries with the bank about such a move, said Mr Al Ghurair.

The bank’s change comes just three months after the UAE was upgraded to emerging market status by MSCI, whose equity indexes are tracked by investors with about US$7 trillion in assets.

The country had previously been designated as a frontier market.

The last UAE based bank to increase its proportion of shares available to foreigners was Abu Dhabi’s First Gulf Bank, which raised its foreign ownership threshold to 25 per cent from 15 per cent in June 2011.

Union National Bank allows foreigners to own 40 per cent of its shares. National Bank of Abu Dhabi and Abu Dhabi Commercial Bank have a foreign ownership threshold of 25 per cent.

In marked contrast, Emirates NBD’s foreign ownership is capped at 5 per cent of its shares.

Two hundred shares of Mashreq Bank were traded yesterday, sending the share price 15 per cent higher to close at Dh66.70 on the Dubai Financial Market.

The shares have lagged the overall market during a bull run for UAE equities recovering from the global financial crisis.

In the second quarter, Mashreq lent more during than during any full-year period since 2008 as the Dubai economy recovered. The bank reported net profits for the quarter of Dh402.5 million, an increase of 25.6 per cent from with the corresponding period a year earlier.

The bank forecast its upcoming profits to be driven by the increase in loans.


* With additional reporting by Hadeel Al Sayegh