x Abu Dhabi, UAEThursday 18 January 2018

Qatari banking merger called off

International Bank of Qatar and Al Khaliji Commercial Bank call off a planned tie-up.

Al Khaliji Commercial Bank has called off its merger with International Bank of Qatar, putting an end to a deal that was expected to create a formidable rival for Qatar's largest banks.

The deal has been shelved in the absence of an agreement on final terms, the banks said in a joint statement to the Qatar Exchange.

"The parties have together decided to end negotiations for the proposed combination of businesses after final terms could not be agreed," the banks said.

"Both organisations maintain strong positive outlooks for growth in Qatar and the banking sector overall."

The planned merger, first announced in May last year, was intended to help stabilise the country's fractured banking sector.

Qatar's population of 1.4 million is served by 18 banks.

International Bank of Qatar (IBQ) said in December that the merger process had entered the final stages of negotiation and due diligence, and the banks had begun discussions with key regulators.

IBQ is privately owned and does not trade on stock exchanges. Its stakeholders include National Bank of Kuwait, Al Sanad Commercial Company and Broog Trading Company, according to Zawya.

"It's unfortunate that we couldn't come to an agreement on terms, but we'll continue with our strategic plan," said George Nasra, the managing director of IBQ, adding that the bank's hopes of future consolidation remained.

"We'll keep our eyes open."

Shares in Al Khaliji fell sharply on the Qatar Exchange yesterday, closing 7.08 per cent lower at 16.40 Qatari rials.

"I would like to reassure shareholders that we are fully focused on the consistent implementation of our successful strategy, which will ensure continued growth and a prosperous future," said Robin McCall, the acting chief executive of Al Khaliji.

The failure of the merger prevented the emergence of a potential new challenger to Qatar's top lender, Qatar National Bank, said Elena Sanchez-Cabezudo, a financial analyst at EFG-Hermes.

"The merger of those two entities would have created Qatar's third or fourth largest bank," she said.

"They'd have had a bigger balance sheet that could have competed more effectively with the larger banks."

With no news on the long-rumoured merger of Qatar's Islamic banking units, any future mergers in the sector now seemed remote, Ms Sanchez-Cabezudo added.

"I don't see any consolidation possible in the short term," she said.