Thursday, 1 November 2012

Qatari banks gear up for core sector growth pie


DOHA QATARI banks are bulking up to play a role in funding the country’s massive infrastructure expansion. But in a country which is already overbanked by some measures, they may risk becoming too big.

Doha Bank, Qatar’s fifthlargest lender by market value and part-owned by the country’s sovereign wealth fund, announced plans in October to increase its share capital by 50 percent in the first quarter of next year, raising about $1.6 billion.

Other Qatari banks have tapped debt markets this year. Qatar Islamic Bank, the country’s largest Islamic lender, returned to the global debt market after a two-year absence with a $750 million sukuk sale earlier this month.

Qatar International Islamic Bank followed a week later, pricing its debut $700 million, fiveyear sukuk. Doha Bank also raised $500 million from a bond sale in March.

“For the infrastructure projects, local banks want to be in the game, and they will be given priority by the government,” said Robert Pramberger, acting head of asset management at The First Investor in Doha.

“They need to get the money from somewhere, and they’ll want it to be an equal combination of debt and equity.” An analyst with a Qatari bank, who declined to be named because of the commercial sensitivity of the subject, said he believed the central bank would want to make sure that local lenders took a large slice of the infrastructure business, rather than leaving it to foreign banks.

“There will be a huge incentive for local lenders to raise capital to meet the demand. Banks here are hoping to make quite a lot of money.

“I’m sure the central bank and other authorities are encouraging local banks to bolster their balance sheets, so that they can take advantage of project bonds and other opportunities.” The Qatari government has allocated 40 percent of its budget between now and 2016 to fund a string of mega-projects, including $5.5 billion for a deepwater seaport, $20 billion for roads and a $17.5 billion new airport.

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