Smashing its own previous record, First Gulf Bank (FGB) once again tops the list of highest movers, jumping 403 places from last year’s position and a staggering 725 places from its ranking two years ago. The bank’s turnaround programme propelled its size from a modest local outfit accounting for Dh2.4bn ($653m) in assets and Dh50m in profit five years ago, to 232nd in the Top 1000 world ranking.
These exceptional achievements reflect the United Arab Emirates’ (UAE) benign economic environment and consequent explosive demand for credit. The federation’s 2005 real terms gross domestic product (GDP) growth is estimated at just below 7%, mirroring the previous year’s figure.
FGB’s fortunes started with the involvement of prominent Abu Dhabi-based investors in 1998, which overhauled its management team in 2000. Senior management seats are now occupied by former Citibank professionals. Having established its credentials, the new management team has attracted sizeable shareholdings from the Abu Dhabi ruling family. This support has proved invaluable as the bank seeks to win market share.
FGB reached its current $2085m Tier 1 capital through consequent deals in the past two years. In mid-2004 it issued Dh800m five-year convertible bonds to four strategic partners, raising Tier 1 capital by 128% to Dh1.78bn. Twelve months later, a rights issue of 500 million shares raised an additional Dh5bn and an intention to increase Tier 1 capital further was announced.
The impressive outcome of this expansion strategy was a staggering Tier 1 capital growth of 348% from 2004 to $2085m in 2005. FGB also doubled assets to $7157m and produced a 13.78% return on capital with pre-tax profits of $287m.
