By Archana Narayanan and Filipe Pacheco
Shares of two of the Middle East’s biggest lenders surged Monday after saying they plan to boost foreign ownership limits.
Qatar National Bank jumped 10 percent, the most in more than 12 years, while Dubai’s largest bank Emirates NBD gained 4.5 percent after advancing 14 percent on Sunday.
Qatar National Bank, the region’s largest lender by assets, is seeking shareholders approval to boost non-Qatari ownership to 49 percent from 25 percent, while Emirates NBD wants to raise its limit to 20 percent from 5 percent.
Middle East lenders are seeking to diversify their investor base amid the ongoing impact of lower oil prices and regional politics. Qatar has been involved in a standoff with Saudi Arabia, the United Arab Emirates, Bahrain and Egypt since June, leading to deposit outflows. Emirates NBD, meanwhile, is said to be preparing to submit a bid for Sberbank PJSC’s Turkish unit this month as it faces limited opportunities at home.
“Qatari companies are raising foreign ownership limits to attract foreign capital as the sanctions of the four Arab nations led to significant outflows of some $40 billion last year,” said Jaap Meijer, head of equity research at Arqaam Capital Ltd. in Dubai. He expects as much as $730 million in passive inflows to Qatar National Bank if the limit is increased.
Qatar National Bank said it’s seeking to increase foreign ownership to “encourage more foreign funds to invest in the bank and diversify investors,” and that the move isn’t related to the standoff. Foreign investors currently own about 7 percent of QNB, according to data compiled by Bloomberg.
Emirates NBD could see net foreign inflows of about $1.1 billion if it increases its limits, EFG-Hermes analysts Shabbir Malik and Mohamad Al Hajj said in a research note on Sunday. Foreign investors currently own about 2.4 percent of the Dubai government-controlled lender, according to data compiled by Bloomberg.
“Emirates NBD has a very low foreign ownership limit and should have boosted it back in 2012, when its impairment began to trend lower after it provided for Saad Algosaibi, Dubai World and Dubai Holding,” said Sanyalak Manibhandu, head of research at Abu Dhabi-based FAB Securities LLC.
— With assistance by Matthew Martin