Qatar National Bank, which has a history of buying stakes in small foreign banks, purchased about 23.77 per cent of UAE's Commercial Bank International (CBI) yesterday. QNB's move to own a share of CBI is motivated by its desire to tap into the growing economy of the UAE, particularly the financing opportunities arising from Abu Dhabi's development plans. "This is more about their desire to increase their corporate banking [portfolio] than expanding their retail banking business," said Radwa el Swaify, an analyst at Beltone Financial in Cairo.
Abu Dhabi has set ambitious growth plans that require trillions of dollars of financing. To get a piece of the action, several international banks have opened offices in the capital this year, including Standard Chartered Bank and Barclays. QNB, whose first half earnings grew 54 per cent from the same period last year - including a 27 per cent growth in loans and Islamic financing - has capitalised on Qatar's development and its close relationship with public and private sectors to strengthen its balance sheet.
It has then used its financial muscle to expand into other Arab markets. QNB owns 50 per cent of Tunisian-Qatari Bank and a 49 per cent stake in Qatar National Bank-Syria. Raj Madha, an analyst at EFG-Hermes in Dubai, said buying shares in CBI is consistent with QNB's history of making inexpensive acquisitions to penetrate new markets. With assets of Dh11 billion (US$2.3bn), CBI has nine branches in six emirates.
Mr Madha thinks that both companies mutually agreed to the purchase - versus a hostile take over - so they can increase their marketing abilities. QNB wants to gain corporate clients in the UAE while the relatively small CBI can tap into the infrastructure the much larger Qatari bank offers. QNB, which is 50 per cent owned by Qatar Investment Authority, bought 297.69 million shares or a 23.77 per cent stake in CBI. Public shareholders own 45 per cent of CBI. Another nine per cent is held by Emirates International Investment Company, which counts members of Abu Dhabi's ruling family, the Al Nahyans, among major shareholders.