x Abu Dhabi, UAETuesday 25 July 2017

Qatar keen to invest in Lloyds and RBS

Qatar's prime minister expresses an interest in buying Royal Bank of Scotland and Lloyds Banking Group, two banks nationalised by the UK government in the wake of the global financial crisis.

Qatar is looking at buying a stake in Lloyd's, which was nationalised by the British government during the credit crunch.
Qatar is looking at buying a stake in Lloyd's, which was nationalised by the British government during the credit crunch.

The prime minister of Qatar says the Middle East state wants to invest in Britain's state-owned Royal Bank of Scotland (RBS) and Lloyds Banking Group.

"About any investment in the state or partially state-owned banks, we are very open for any investment in the UK," Sheikh Hamad bin Jassim bin Jaber bin Muhammad Al Thani, the prime minister, told the BBC last night.

"We are capable of being engaged and will continue to be engaged in discussions," he said when asked by Reuters about a possible deal with either of the British banks.

Sheikh Hamad is also the chief executive of the country's sovereign wealth fund, Qatar Investment Authority.

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Qatari investors have acquired a large number of trophy assets in the UK including the luxury department store Harrods, a stake in the supermarket chain Sainsbury's and part of Songbird Estates, which owns Canary Wharf.

A consortium of Qatari investors is also funding the development of The Shard in London, a Renzo Piano-designed tower, which is expected to become the tallest in Europe when it is completed.

David Cameron, the British prime minister, has arrived in Doha as part of a trade delegation to the Middle East.

Stephen Green, the UK trade minister, said Qatar had expressed interest in British financial services firms alongside infrastructure-related investments.

"They like and respect what Britain has to offer," Mr Green told Reuters.

John Sfakianakis, the chief economist at Banque Saudi Fransi, said a possible deal involving the lenders was part of a wider strategy Qatar was pursuing over western banks.

"It shows that there's willingness from Qatar to invest more funds into the banking sector in the UK," Mr Sfakianakis said. "They have traditionally invested in financials, whether in the UK or elsewhere. It's part of a wider strategy to invest in western banks, particularly in Europe."

Credit Suisse and Barclays both raised large amounts of investment from Qatar Holdings in the global financial crisis.

Any sale of a stake is unlikely before the release of a report on the future of British banks by the Independent Commission on Banking, due this autumn.

RBS and Lloyds were nationalised by the UK government in a bid to stabilise the banking industry after the credit crunch.

RBS was nationalised in 2009, while Lloyds acquired Halifax Bank of Scotland in 2008, and a year later Lloyds was partly nationalised.

The British government now owns an 83 per cent stake in RBS and 40.6 per cent of Lloyds, both of which are managed by UK Financial Investments, which also manages the government's stake in Northern Rock.

"The UK government has encouraged Lloyds and RBS to think about their own solutions to reducing their government stake, rather than us sitting here waiting for their share price to go up," said Michael Trippitt, a banking analyst at Oriel Securities.

"I'm under the impression that the government was looking to sovereign wealth funds and large overseas funds."

After yesterday's news, RBS lost 0.27 per cent to 47.95 pence a share, while Lloyds dropped 0.6 per cent to 65.84 pence a share.

 

ghunter@thenational.ae