CGI Gulf Insights of the Week (160)

ByCGI Gulf Insights of the Week
Monday, 09 September 2019
Published inSeptember 2019

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CRIF GULF WEEKLY INSIGHTS

Country Risk Update -
United Arab Emirates

Risk Indicator - DB3b
Risk Level - Slight
Ratings Trend - Deteriorating
The UAE continues to strengthen its position as a regional safe-haven and business hub. Access to global markets from Dubai will be among the best in the world.

Market Overview

Emirates NBD near to hiring banks for $2bn rights sale
Dubai’s biggest bank is close to appointing Citigroup Inc. and Morgan Stanley to manage a rights share offering of as much as $2 billion, people with knowledge of the matter said.
Emirates NBD PJSC may also involve its investment banking division, Emirates NBD Capital Ltd., in the process and could hire other banks as well, the people said, asking not to be identified because the discussions are private. Banks haven’t formally been hired for the sale and the situation may change, they said. A spokeswoman for Citigroup declined to comment. A spokesman for Morgan Stanley declined to comment. Emirates NBD last year proposed selling new shares to help fund the acquisition of Turkey’s Denizbank AS. The Dubai lender on 5th September, 2019 said it raised 305 million pounds ($373 million) from the sale of a stake in London-listed Network International Holdings Plc. The bank last week also raised the cap on foreign ownership limit to 20 percent from 5 percent and will seek shareholder approval to double the new limit to help attract capital. Emirates NBD shares fell as much as 3.3 percent in Dubai, while the benchmark index dropped 0.7 percent.

Emirates NBD sells shares in UAE payments firm in $370m deal
Emirates NBD, the largest bank in Dubai, has confirmed the sale of an aggregate of 52.6 million ordinary shares in the share capital of UAE-based payments firm Network International. The bank, which holds more than 20 percent stake in Network International, said in a statement that it executed the sale of shares via an accelerated bookbuild to institutional investors at a price of 580 pence per ordinary share. “Following the completion of the placing, Emirates NBD Bank will hold 59.7 million ordinary shares in the share capital of Network International, representing approximately 11.9 percent of Network International’s entire issued share capital,” Emirates NBD said in a filing to Dubai Financial Market. The bank will raise AED1.37 billion ($370 million) from the sale, and Network International will not receive any proceeds from the placing, the statement said. The bank added that Citigroup Global Markets Limited, Morgan Stanley & Co International, JP Morgan Securities, and Emirates NBD Capital Limited acted as book-runners in connection with the placing. Last month, Network International said it delivered 9.3 percent growth in the Middle East in the first six months of 2019, driven by increased total volumes, transaction growth and diversification provided by new products and services. The payment solutions provider raised $1.4 billion – the biggest listing in Europe this year - from an initial public offering (IPO) in April.

Shareholders approve plan to delist Ithmaar Holding from Boursa Kuwait
Shareholders of Ithmaar Holding, a Bahrain-based investment company, have approved plans to voluntarily delist from Boursa Kuwait. The company, licensed and regulated by the Central Bank of Bahrain (CBB), will maintain its listing on the Bahrain Bourse and Dubai Financial Market (DFM). Ithmaar Holding said its plans to voluntarily delist from Boursa Kuwait will have no effect on its subsidiary, Ithmaar Bank or any of its customers or investors. Ithmaar Bank, a Bahrain-based Islamic retail bank, is a separate legal entity from its parent company, Ithmaar Holding. The move, which was proposed earlier this month, is subject to the approval of relevant authorities in Kuwait and Bahrain, the company said in a statement. Earlier this month, Ithmaar Holding reported a net profit of $13.03 million for the first half of 2019, a 20.4 percent increase compared to the same period in 2018.

Bahrain bank launches new unit to help struggling firms
National Bank of Bahrain (NBB) has announced that it has launched a new business to offer specialized financial restructuring advice for companies across the Gulf region. The new financial restructuring business is part of the bank's ongoing diversification and will be headed by Bruce Wade, chief executive – financial restructuring. The unit will have a primary focus on corporate clients in addition to selective commercial banking clients, with services including acting as an independent advisor to companies facing challenges as well as for companies where NBB is a creditor. Initially Wade joined the bank in 2014 as chief risk officer after roles at Citibank, Bank of Tokyo Group, Saudi Hollandi Bank, and Riyad Bank. Currently, he also serves as the chairman of the Risk Management Committee at the Bahrain Association of Banks. Jean-Christophe Durand, CEO of NBB, said: “As part of NBB’s transformation, strengthening our presence and support for local and regional companies continues to be a central focus for the Bank. "Looking at the needs of the market and where NBB’s experience and resources can best be deployed, we are pleased to launch our new Financial Restructuring Division. With the right expertise and advice, we believe we can play an important role in supporting efforts by companies to restructure.

63% of UAE residents said to snub home insurance - poll
Nearly two-thirds of people do not have home insurance, according to a poll of users on Dubizzle Property, the UAE’s biggest and most visited property platform. The findings revealed that out of the 1,458 respondents, 63 percent do not own home insurance, leaving the majority susceptible to major losses or damages. Data also showed that more than 80 percent are currently renting the properties they live in, and 70 percent are living in apartments. When asked if they are interested in purchasing home insurance, 75 percent stated that they are not, and 18 percent were not sure. However, only 30 percent had full knowledge of the benefits of it, with the majority (70 percent) being unaware of the type of coverage they can receive. “Home insurance should be considered as the next step in the home-seeking journey in the UAE as it can protect residents from potential losses in the future,” said Matthew Gregory, director of sales, dubizzle Property. There were several factors highlighted by the respondents that deter them from wanting to purchase home insurance, with 41 percent claiming they ‘don’t need it’, followed by 24 percent believing that ‘it is the landlord’s responsibility’. Another 19 percent stated that home insurance is ‘too expensive’ whle other factors included not seeing the benefit of owning it (17 percent), not knowing how to buy it (9 percent) and not trusting insurance companies (8 percent). David Harris, director of distribution at RSA Insurance, said: “The region’s low penetration of home insurance is largely a result of lack of awareness coupled with misconceptions around affordability and coverage policies.

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