CEO turnover impacts Mashreq Capitals investor management rating

The investment manager quality assessment of Mashreq Capital has received a downgrade from ratings agency Moody’s.

The downgrade of the asset management arm of Dubai-based Mashreq Bank is in light of its high turnover of chief executives at the firm. Mashreq Capital, which manages bond, equity and open-ended funds, has had four chief executives since 2016, according to The National.

In a statement Moody’s said that the high CEO turnover has had a direct impact on the company’s ability to execute on its strategic business initiatives and has led to a weakening in management quality.

Mashreq Capital’s investment manager quality assessment was downgraded to MQ3 from MQ2 – although it still reflects Moody’s overall view the firm has “good” asset management characteristics.

A decline in assets under management to $1.3 billion, from $1.5billion at the end of 2016, and continued weak investment performance of its equity products which could prevent the firm from attracting new inflows in this segment, reducing asset class diversification, were also factors considered in the downgrade, Moody’s said.

However, the firm remains adequately able to support its investment management activities, and the rating reflects the strategic and operational backing provided by its parent company, Mashreq Bank.

Should assets under management display sustainable growth, risk-adjusted results are maintained over a long period, and if the firm’s assets and client base become more diversified, the assessment could be improved. However the assessment could be further threatened by any more senior level departures, any significant deviation from company procedures, and a further decline in either assets under management or the risk-adjusted performance of funds, could threaten Mashreq Capital’s assessment, according to The National, citing Moody’s.

Mashreq could not be reached for comment.