First Abu Dhabi Bank has proposed removing a cap on the foreign ownership limit in its sharers after the UAE started loosening rules to attract international investors.
The board’s proposal is subject to the supervision of regulatory authorities and would require amendments to the current laws and policies, the nation’s biggest bank said in a statement.
The move has "the potential that other public companies in the UAE may apply similar measures," it said as it also announced a record half year net profit of AED6.3 billion, up 4 percent year-on-year.
This “is positive news for UAE banks as it may allow international banks to take strategic stakes in local lenders, especially for the mid to small sized lenders that are underperforming,” said Edmond Christou, a financials analyst with Bloomberg Intelligence, by email.
“This is likely to bring new skills, speed up digital transformation with knowledge sharing and international investments.”
The UAE said this month it’ll allow foreigners to own 100 percent of businesses across industries. The federal government will leave it to individual emirates to “decide the ownership percentage in each activity according to their circumstances,” said Prime Minister Sheikh Mohammed Bin Rashid Al Maktoum.
The UAE, the second-biggest Arab economy, currently caps foreign ownership of businesses at 49 percent, except in so-called economic free zones. First Abu Dhabi Bank’s shareholders in February approved raising its foreign ownership limit to 40 percent from 25 percent.
First Abu Dhabi Bank’s proposal comes after the market regulator in neighbouring Saudi Arabia removed the limit of ownership of publicly traded companies for foreign strategic investors. While the Saudi market watchdog has removed the cap, limits by other regulators or a company’s own rules still apply.
First Abu Dhabi Bank in May asked MSCI Inc to clarify its decision not to increase the lender’s weighting on its MSCI EM index. The index compiler’s CEO said in an interview in March that a strategic stake controlled by Abu Dhabi’s royal family was an obstacle for higher weighting.
FAB shares closed unchanged on Wednesday. They’ve risen 6.4 percent so far this year, compared with a 3.4 percent gain in the exchange’s benchmark index.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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