UAE's First Gulf Bank eases foreign ownership curbs
(Updates with details, background)
By Stanley Carvalho
ABU DHABI, May 30 (Reuters) - Abu Dhabi's First Gulf Bank FGB.AD said on Wednesday it would ease restrictions on foreign investment in its stock by abolishing a ceiling on ownership by non-United Arab Emirates shareholders.
The bank will also borrow more than $500 million by selling dollar-denominated bonds in the third quarter to finance lending, First Gulf Chief Executive Andre Sayegh told Reuters.
Shareholders of Abu Dhabi's third-largest lender by market value agreed to scrap the 3 percent cap on ownership by any single foreign investor, Sayegh said.
They retained a rule preventing total foreign ownership from exceeding 30 percent of the bank's stock, he said.
Most UAE companies restrict foreign ownership of their stock, although many have been easing the curbs, triggering rallies in their shares.
Shares of Aldar Properties ALDR.AD have risen around percent since the company announced on Feb.18 it would allow foreigners to own as much as 40 percent of its stock.
Foreigners own 10 percent of First Gulf shares, Sayegh said after a meeting of shareholders.
Shuaa Capital upgraded First Gulf Bank to "buy" from "neutral" on May 16, estimating the stock's fair value at 16.20 dirhams ($4.41). The shares closed on Wednesday at 14.85 dirhams.
The shareholders also approved the lender's plans to sell bonds under a $3.5 billion euro medium-term note programme.
The first bonds, denominated in dollars, would be sold in the third quarter to raise more than $500 million, Sayegh said.
The bank announced the eurobond programme earlier this month, saying it wanted to correct a mismatch between the tenure of the lending, which is primarily long term, and sources of funding, which are usually short-term deposits.
"They could be five-year bonds," Sayegh said.
Citigroup (C.N), Deutsche Bank AG (DBKGn.DE) and Standard Chartered Bank (STAN.L) would be lead arrangers of the sale, he said, adding the next tranche could be in early 2008.
"We are getting funds at lower costs, longer tenors and it helps in improving our credit rating."
In February Fitch Ratings affirmed First Gulf's Issuer Default rating at "A" with a stable outlook, saying it partly reflected the bank's rapid loan growth and a fairly high level of concentration in the corporate loan portfolio.[nFit190209]
First Gulf has benefited from rapid growth of Abu Dhabi real estate, winning a contract in January from the emirate's government to offer housing loans to UAE nationals.
Bank lending to the real-estate and construction sectors in the UAE has surged as the OPEC oil producer invests revenues in developing tourism, real estate, and infrastructure projects.
((Editing by Sue Thomas; Gulf newsroom +971 4 391 8301; dubai.newsroom@reuters.com))
($1=3.671 dirham) Keywords: FIRSTGULF SHARES/
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