Legendary investor Mark Mobius could open business in Saudi Arabia

Mark Mobius. (Reuters)
Updated 18 October 2017
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Legendary investor Mark Mobius could open business in Saudi Arabia

DUBAI: Mark Mobius, the legendary investor, is considering setting up an office in Saudi Arabia for his firm, the $750 billion Franklin Templeton Investments (FTI) group.

In an exclusive interview with Arab News, Mobius, who is executive chairman of FTI’s emerging markets business, said that he expected a big increase in investment opportunities in the Kingdom as part of the economic transformation strategy being pursued under the Vision 2030 reform plan, and was exploring the possibility of a permanent presence in Saudi Arabia.

“In Saudi Arabia we still have to invest via proxies, but it’s quite possible we’d like to invest directly in Saudi Arabia, and we could do that via an office there. Saudi could become very big indeed,” he said.

“We would definitely consider opening an office in Saudi Arabia and getting a full investment licence. What would make it even more attractive would be if the GCC (Gulf Cooperation Council) nations got together and unified their economies in terms of currencies and investment flows. It would be in the interest of Saudi Arabia to encourage that, and eventually include Egypt too in a big trading group,” he added.

Mobius currently invests in listed securities in Saudi Arabia in the food, banking and logistics sector, but is looking to expand his exposure to the country.

“At the moment, out of $500 million we have invested in the Middle East, some $270 million is in Saudi Arabia. But there is $29 billion of assets in the emerging markets group. We could easily double the investment in Saudi equities. If the reforms in the Kingdom move ahead, we could easily absorb another $200 million to $300 million in Saudi Arabia,” he said.

But he added that it was important for Saudi Arabia to be upgraded to emerging market status by MSCI and FTSE Russell, the index compilers. “Inclusion in the indices is vital,” he said.

Mobius, who has been investing in global emerging markets since 1987, said he was interested in any public offering of shares in Saudi Aramco, but with certain caveats.

“There are corporate governance issues that would leave a big question mark. The Saudi government is obviously running the show and will have to make it clear that the quoted element of Aramco is independent of the government. The way to do that is to have truly independent directors and ensure that they and the shareholders will get a chance to vote on key issues,” he said.

There were other issues regarding Aramco, he said. “It would also be good to spin off those things like schools, hospitals and social projects that are not strictly part of the oil business,” he said, although he conceded that dividend policy would be important in determining how global investors viewed these issues.


Danske Bank money laundering ‘giga scandal’ spreads to Britain

Updated 29 min 41 sec ago
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Danske Bank money laundering ‘giga scandal’ spreads to Britain

  • By 2013, the number of UK-registered customers in the branch’s non-resident portfolio had topped 1,000
  • Danske Bank Chairman Ole Andersen said that the lender had made an assessment of whether it violated any US laws
LONDON/COPENHAGEN: Danske Bank’s money laundering scandal spread on Friday as Britain’s National Crime Agency (NCA) said it is investigating the use of UK-registered companies.
“This is a giga scandal,” European Union Competition Commissioner Margrethe Vestager said, joining a growing chorus of calls for a clampdown on the billions of euros which are alleged to have been “washed” through European banks.
An NCA spokeswoman said the British agency was working with partners across government to restrict the ability of criminals to use UK-registered companies in money laundering.
British and Russian entities dominate a list of accounts used to make €200 billion ($236 billion) in payments through Danske Bank’s branch in Estonia between 2007 and 2015, many of which the bank said this week are suspicious.
By 2013, the number of UK-registered customers in the branch’s non-resident portfolio had topped 1,000, Danske Bank’s investigation revealed, ahead of clients from Russia, the British Virgin Islands and Finland.
As the scope of the alleged money laundering through Danske Bank has widened, investor concerns over the potential penalties it could face have increased, with particular focus on what action if any US authorities might take against the bank.
So far, the US has not said whether it is investigating, although Danske Bank Chairman Ole Andersen said that the lender had made an assessment of whether it violated any US laws. He has declined to share the bank’s conclusion of this.
“We need to do more to prevent money laundering from happening,” Vestager told reporters in Copenhagen following the resignation on Wednesday of Danske Bank CEO Thomas Borgen after an investigation commissioned by the bank exposed past control and compliance failings.
Borgen, 54, was in charge of Danske Bank’s international operations including Estonia between 2009 and 2012.
He said on Wednesday that he had been “personally cleared from a legal point of view” while Danske said its board had not breached their legal obligations.
The European Commission last week recommended banking supervision changes, including bolstering national authorities, but stopped short of setting up a new financial crime agency called for by the European Central Bank.
In a sign of the growing pressure on Danske Bank, which already faces criminal inquiries in Denmark and Estonia, the chief executive of CARE Danmark said on Twitter that the Danish charity had decided to end its relationship with the lender.
International aid charity Oxfam also called on Danish municipalities to cut ties with the bank, saying it has not been able to re-establish the trust of Danish citizens.
The mayor of Aalborg, Denmark’s third largest municipality, said he would discuss its partnership with Danske Bank at the next municipality committee meeting, but noted that there were only two banks in Denmark would be able to handle a municipality its size.
“Danske Bank has been involved in money laundering which is deeply reprehensible and outrageous but Nordea has been involved in tax havens, so the entire bank sector needs to clean up for us to have a trusting collaboration with the banks,” Thomas Kastrup-Larsen said.
Danske Bank’s tiny Estonian branch accounted for as much as 10 percent of group profit during the period when suspected money laundering was conducted via its operations there.