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DUBAI, Sept 2 (Reuters) - Emirates NBD, Dubai’s largest bank, on Monday said it had raised its foreign ownership limit to 20% from 5%, pushing its stock to a 12-year high as markets opened.
The bank also announced its intention to raise its foreign ownership limit to 40% in the future after seeking approvals from its shareholders and the relevant regulatory authorities.
The move follows a similar decision by First Abu Dhabi Bank , the largest lender in the United Arab Emirates, which in July proposed removing the foreign ownership limit cap of 40% to attract more foreign capital.
The chairman of Emirates NBD, Sheikh Ahmed Bin Saeed Al Maktoum said in a statement the move contributes to “increased liquidity and depth in the UAE’s capital markets,” in addition to diversifying the bank’s investor base.
“We expect a strong reaction in the stock of ENBD today and in the coming few days,” said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital.
“In fact we think this can trigger a rally in all UAE stocks, especially banks, where foreign ownership has been a constraint. This shall also result in higher overall volumes and the market can be a strong performer for the rest of the year.”
The bank’s shares surged 13.1% to 13 dirhams, their highest level since October 2007, in early trade on Monday.
Emirates NBD’s stock has risen 46.2% year-to-date compared with a 12.6% rise in Dubai’s index.
Emirates NBD in July completed the purchase of Turkey’s Denizbank, in a deal which will help diversify Emirates NBD’s business, the bulk of which comes from the United Arab Emirates.
The bank in July reported an 80% rise in second-quarter net profit, a sign that top banks in the United Arab Emirates are withstanding a sluggish economy and a property downturn in Dubai. (Reporting by Tuqa Khalid and Davide Barbuscia, editing by Louise Heavens)