x Abu Dhabi, UAEWednesday 17 January 2018

Qatar banks size up UAE and global investments

Qatar's banks are making plans for significant capital investments in the UAE and around the globe, as its sovereign wealth fund takes two large stakes in major global banks.

Qatar National Bank and Commercial Bank International, its UAE affiliate, on Tuesday lent US$350 million to Air Arabia, the Sharjah low-cost carrier. Emre Rende for The National
Qatar National Bank and Commercial Bank International, its UAE affiliate, on Tuesday lent US$350 million to Air Arabia, the Sharjah low-cost carrier. Emre Rende for The National

Qatar's banks are making plans for significant capital investments in the UAE and around the globe, as its sovereign wealth fund takes two large stakes in major global banks.

Qatar National Bank, the Middle East's biggest lender, and Doha Bank are targeting UAE companies to grow their lending books.

Qatar's sovereign wealth fund has also taken stakes in Deutsche Bank and VTB, respectively Germany's biggest bank and Russia's second-biggest bank, it was revealed this week.

A wave of new project spending in the UAE was expected to drive new business into the arms of regional lenders who were able to provide cheaper funding than that of export credit agencies or international banks, said R Seetharaman, Doha Bank's chief executive.

"Dubai is getting back on track in terms of overall business performance," he said.

"The opportunities are opening up now, that's what we want to cash in on."

Qatar National Bank, the Arabian Gulf's biggest lender, is also splashing cheap liquidity into the UAE.

On Tuesday, QNB and Commercial Bank International, its UAE affiliate, said it had lent US$350 million to Air Arabia, the Sharjah-based low-cost carrier.

The deal will allow Air Arabia to purchase 10 new Airbus A320 aircraft as part of an order for 44 placed in 2007.

QNB is also providing strategic funding for the Meydan Group's property projects in Dubai. The bank said yesterday it had received approvals to launch operations in India.

Meanwhile Doha Bank has earmarked a minimum of $1.5 billion to lend to companies in the UAE from a total of $12bn for what it calls "high-potential" clients around the Gulf.

Doha Bank has budgeted at least Dh1.8bn for Dubai in the next eight months, Mr Seetharaman said, and a further Dh3bn for Abu Dhabi, where it opened a branch in December.

The bank also plans to expand its representative office in Sharjah to cater to the Northern Emirates and says it is likely to exceed that amount.

Qatar invested at least €100m (Dh472.1m) in Deutsche Bank's recent rights issue, the Financial Times reported yesterday. The bank declined to comment, although sources close to the company confirmed the deal had taken place.

Qatar's sovereign wealth fund will also take a stake of about $500m in VTB Capital as part of a capital hike alongside similar amounts for Norway and Azerbaijan, the Russian bank's chief executive, Andrey Kostin, told Reuters yesterday.

Qatar currently owns sizeable stakes in international banks and the country is under pressure to send capital overseas.

Qatar is struggling to contain rising domestic inflation as a surge in gas revenues and investment related to the 2022 Fifa World Cup, coupled with the record low interest rates the country pays to borrow from bond markets, leave its economy awash with cheap liquidity.

Consumer prices accelerated to 3.7 per cent year-on-year in April, the highest level since 2009.

Qatar is considering moving to a more flexible currency peg with the dollar, a Qatar central bank official told Reuters yesterday.

"Despite operating gas production and export at full capacity, Qatar's current account surplus continued to expand beyond our expectations [in 2012]," analysts from Barclays wrote in a research report this week.

"We expect Qatar's foreign asset accumulation to continue to be a cornerstone of its growth and diversification strategy and for the stock of foreign assets, to keep on growing beyond its current estimated size of $160bn at end-2012, contributing to the pool of generated investment income."

 

ghunter@thenational.ae