While the international focus was on Qatar’s project deal flow and developments at the new Qatar Financial Centre (QFC), two major Gulf banks took the opportunity to buy into the state’s thriving onshore market in August 2004. Regional leviathan National Bank of Kuwait (NBK) was first, with a 20% stake in Grindlays Qatar Bank, quickly followed by Bahrain’s Ahli United Bank (AUB), which bought 40% of Al Ahli Bank of Qatar (ABQ).
For Grindlays, the arrival of NBK ended a period of continuous ownership changes that, since the turn of the millennium, had seen it go from ANZ to Standard Chartered. In 2003, the latter sold its 40% stake to Qatari foreign minister Sheikh Hamad bin Jassim bin Jaber Al Thani, who with other local investors then sought a new institutional partner and management contractor. New shares were made available to NBK, taking total shareholder equity to about $100m, and NBK took over the management contract for the bank while retaining Desmond Holmes as general manager.
Rise in profits
Despite significant one-off costs incurred by changing the bank’s name to the International Bank of Qatar (IBQ), Mr Holmes reports a 43% increase in loans and advances during 2004, leading to a 9% increase in profits before provisions at QR36.8m ($10.1m). “The linking of IBQ with an institution as well known and respected as NBK gives the bank a profile it could not have achieved as a privately owned bank,” he says. “With the management agreement and capital increase, IBQ is now well positioned to participate in the significant growth currently under way in Qatar.”
The management team that AUB sent to Qatar faces different challenges. Though previously AUB had bought Grindlays assets in Bahrain, the NBK deal ultimately closed that entry option. AUB was also interested in ABQ though and, following an Emiri decree to authorise the purchase of a local bank by a foreign entity, it bought all 12,187,500 ABQ shares in a new issue exclusively launched on its behalf. Those shares raised ABQ’s capital from $85m to $239m. AUB decided to edit its name to Ahli Bank. “The increase in capital will allow Ahli Bank to significantly grow its retail, commercial, treasury and private banking businesses, and will improve the quality and depth of services provided to its clients,” said AUB chairman Hamad Al Marzouq at the contract signing.
By the end of this year, AUB plans to grow Ahli Bank’s network from eight branches to about 11, and it will also bring the Future Bank brand to Qatar. Future Bank is the result of a three-way partnership AUB has struck with Bank Melli Iran and Bank Saderat Iran, which consolidates the Iranian banks’ Gulf assets and gives AUB a springboard into the Islamic republic.
One of the most significant outward M&A deals of the year was QNB’s July purchase of London-based Ansbacher Holdings Ltd. QNB paid a premium of £15m over the net asset value of the Ansbacher Group when it bought the company from South African financial services firm FirstRand International in a total deal valued at £135m.
Fast-track to HNWIs
The acquisition was a PR coup and also fast-tracked QNB’s wealth management aspirations. At a stroke it has gained representation for high net worth clients in the Bahamas, Cayman Islands, Jersey, Guernsey, Zurich and Dubai. Ansbacher will be kept intact, and used as a plug-and-play private banking arm. QNB chief executive Saeed Al Misnad says Ansbacher offers a strong banking business in the UK, Cayman and Channel Islands with particular expertise in real estate and property development plus specialised lending including yacht finance.
