The merger of Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar is said to take six months to complete, Masraf Al Rayan’s chairman Hussain Ali al-Abdulla said lately. In December Reuters had reported that merger talks had begun which, if successful, would create the Gulf state’s second-largest bank. The new bank would have assets worth more than 160 billion riyals ($44 billion).
KPMG and PricewaterhouseCoopers have been appointed as merger advisers, along with law firm Allen & Overy as legal adviser, and furthermore the Barwa Bank and International Bank of Qatar. Masraf Al Rayan’s shareholders approved the issuance of sukuk worth up to $2 billion to meet the bank’s liquidity needs. In January banks had been appointed to handle a debut sukuk issue of around $500 million, banking sources told Reuters that month, but Abdullah said on Sunday the timing of the issue had not been finalised. Asked whether the bank’s liquidity had been affected by low oil prices Abudullah said “liquidity now is better than in 2016” and that the U.S. Federal Reserve’s raising of interest rates last month would improve the profits of Qatari banks.
According to Moody’s Investors Service, a proposed merger between three Qatari banks would help “rebalance” the banking sector in the country. The merger is currently at due diligence stage and will be subject to approval by the relevant authorities. The merged entity between Masraf Al Rayan, Barwa Bank and International Bank of Qatar would create the largest Islamic bank and second largest lender in Qatar. Total assets would amount to around QAR173bn ($48bn) and the market share would be around 14%. Moody’s assistant vice president Nitish Bhojnagarwala said Islamic banking asset growth has outpaced conventional banking in Qatar, as demonstrated by a 21% compound annual growth rate of loans for Islamic banks between 2011 and 2016 compared with 14% for the conventional banks. The GCC is witnessing a consolidation in the banking sector, with the two largest lenders in Abu Dhabi also currently preparing to merge.
Fitch Ratings has affirmed Qatar National Bank's Long-Term Issuer Default Ratings (IDR) at 'AA-'. The agency has also affirmed the IDRs of The Commercial Bank, Doha Bank, Qatar Islamic Bank, Al Khalij Commercial Bank, Qatar International Islamic Bank and Ahli Bank and International Bank of Qatar at 'A+'. The Outlooks on all the Long-Term IDRs are Stable. Fitch has also upgraded International Bank of Qatar's Viability Rating, which is driven by its growth strategy, focusing almost exclusively on Qatar.
Qatari firm Barwa Real Estate Company, has raised $175m through an Islamic loan from International Bank of Qatar to refinance its existing debt. The sharia-compliant loan will last for seven years from the date that the company draws down on the facility. In an effort to refinance its current debt obligations, Barwa Real Estate intends to increase the lifespan of the maturities on the best available terms, as part of its five-year business plan running between 2016 and 2020. As Qatar’s largest listed developer, Barwa Real Estate reported more than doubling its fourth quarter net profit in March this year, as well as an improved dividend payout for the full year. Barwa Real estate is listed on the Qatar Stock Exchange.
It seems that Barwa Bank made plans to apply for a credit rating next year before a possible debt offering. Chief Executive Officer Steve Troop noted that is a good set of results will come up in 2012, they will look for a rating in 2013.
Qatar’s biggest lender Qatar National Bank SAQ (QNBK) raised $1 billion in a sukuk offering earlier this month. Doha Bank QSC, Al Khaliji and International Bank of Qatar have announced plans to sell debt after no sales by lenders in the country last year.
The stockwas of QIB flat at 77 Qatari rials, as the QE Index fell 1.02 per cent to 8,156.60.
If the planned tie-up between Al Khaliji Commercial Bank and International Bank of Qatar, now called off, would have happened, it would have created different prospects for QIB. Also a potential threat from HSBC Amanah is vanishing.
Qatar's Doha Bank (DOBK.QA) does not expect a major financial impact from the central bank's decision to separate the Islamic operations of conventional lenders in the Gulf Arab state.
Doha Bank will continue to meet its contractual obligations within its Islamic business and will seek clarification from the central bank when required.
The central bank issued a circular to banks, saying it "has been decided to terminate the activities of the Islamic finance services" offered by conventional banks.
Other Banks effected by the directive include international lender HSBC (HSBA.L), Qatar National Bank (QNBK.QA), Commercial Bank of Qatar (COMB.QA), Al Ahli Commercial Bank AABQ.QA and International Bank of Qatar.