Emirates NBD raises foreign ownership limit to 20 percent
Emirates NBD PJSC, one of Dubai’s leading banks, has raised the cap on foreign ownership of its shares from 5 percent to 20 percent with immediate effect following regulatory approval. It now plans to seek approvals from current shareholders and regulators to push this limit to 40 percent, as per statement issued.
The easing rules are an attempt to attract more foreign investors in the bank, which will boost its capabilities under slowing market. Currently, the government makes up 55.76 percent of Emirates NBD’s shareholders.
In February earlier this year, First Abu Dhabi Bank raised the foreign ownership cap to 40 percent. In mid-July, they announced a proposal to eradicate the cap on foreign ownership of its shares, following the announcement by UAE government to allow 100 percent foreign ownership in 122 economic activities.
Following the announcement of Emirates NBD raising the cap to 20 percent, the bank sold a stake in its card payments processing unit that saw its first-half profit climb by 49 percent.
It also saw the Dubai index rise by 0.7 percent, while that of Emirates NBD rose by 4.9 percent — closing at a 12-year high.
A day after the announcement, the shares continue to climb. We have seen a 6 percent jump since yesterday.
"[Increase in foreign ownership limit ]will strengthen the U.A.E.'s proposition as one of the most attractive economies for foreign direct investment and contribute to increased liquidity and depth in the UAE's capital markets."Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of Emirates NBD
Increasing foreign ownership limit can welcome a number of positive impacts on local companies in the MENA region. Foreign ownership often raises the bar for operations, boosting transparency, profitability as well as more organisation in corporate governance. The positive impacts of the decision is already witnessed on the stock market. We’ll be watching if the cap raises to 40 percent, as implied by Emirates NBD.
