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Qatar rules seen limiting retail banking growth

New regulations to limit expansion of retail banking-CFO; Further consolidation in banking sector seen; Al Khaliji not currently in talks to sell Islamic assets


May 4, 2011 4:13 by

New regulations on personal lending in Qatar will restrict the expansion of the country’s already competitive retail banking sector, Al Khaliji Commercial Bank’s chief financial officer said on Wednesday.

“The retail market in Qatar will always be extremely competitive and it will be very difficult to justify a large retail franchise while you have a small local bankable population,” Christiaan de Beer, Al Khaliji’s group chief financial officer told reporters on the sidelines of an event in Doha.

“For that reason, we have deliberately not over expanded into this space.”

Qatari citizens can now borrow no more than 2 million riyals ($549,254) on loans with a maximum maturity of six years and 400,000 riyals on loans of no more than four years.

De Beer said the new regulations would have a limited impact on his bank’s profitability. “Not zero impact, but limited, because the retail component of our franchise is very small,” he said. “Clearly, it will not make any sense now to pursue an aggressive retail strategy in this market,” he added.

Qatar, the world’s largest exporter of liquefied natural gas and richest country per-capita, is widely viewed as overbanked. There are 18 banks operating in a nation with a population of only 1.7 million, including four Islamic banks and seven foreign-owned lenders such as European behemoths HSBC and BNP Paribas.

De Beer said he expects further consolidation to take place in the market, but declined to comment on progress with the planned merger between Al Khaliji and International Bank of Qatar.

In February Qatar’s central bank ordered conventional banks to stop offering Islamic banking services by year-end.

While some Qatari banks have said they are in talks with Islamic banks to see whether they are interested in procuring the banks’ sharia-compliant investments, de Beer said Al Khaliji has not entered into any such discussions with potential buyers.

“At this stage, I think there is quite a large spread between buyers and sellers in that space. It would make no sense to offload a relatively good piece of business at a discount,” he said.

“Unless the spreads narrow I don’t think that will be something for us in the long term. But if we were approached, like any commercial transaction, we would take it on its merit.” (Reporting by Regan E. Doherty; Editing by Greg Mahlich)

By Regan E. Doherty


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