Profits and purchases for Al Khaliji

The bank has spent much of the year laying the ground work for its eventual full-scale operation and also completing a successful initial public offering (IPO) for Qatari investors only, in April. The bank offered 120 million shares, or 17 per cent of its stock, in the flotation which will ultimately generate $330m. In the first instance, however, investors only had to pay 50 per cent of the par value of QR10 a share, meaning the IPO was worth $165m.

Funds raised, acquisitions made

The IPO was a solid success and was 2.3 times oversubscribed with well over 85,000 Qataris choosing to invest and producing $385m worth of applications. The bank’s shares were subsequently listed on the Doha Securities Market on August 1.

The bank has also made significant strides in bolstering its staff levels in the first nine months of the year and it has now recruited a workforce of 200 people, including its management team. Al Khaliji has also set up a training branch facility, while work on its HQ is well underway.

But the bank has not had its focus solely on generating capital and establishing its administrative infrastructure – it has been busy cementing deals too, including its first key acquisition.

The UAE based assets of the BLC Bank (France) were purchased for an undisclosed sum at the end of October. The deal provides Al Khaliji with an immediate, if small, network of branches in four of the UAE’s emirates – Abu Dhabi, Dubai, Sharjah and Ras Al Khaimah. Regulatory approval still needs to be obtained from the central banks of Qatar, France and the UAE.

When the deal was unveiled, David Proctor, the head of the bank’s executive team and the advisor to Tariq Al Malki, the Chairman, said Al Khaliji had ‘big ambitions across the Gulf’. The decision to establish its first presence outside of its local market in the booming UAE appears a smart and safe opening gambit for a new business. The UAE’s GDP is expected to grow by more than eight per cent this year, a good two per cent more than the average rate of growth across the GCC as a whole.

Al Khaliji’s choice of the BLC Bank (France) as its initial purchase is also perhaps understandable considering its strong Qatari associations. The bank’s parent firm, Lebanon’s BLC Bank, was 97.5 per cent owned by none other than the Qatar Investment Authority (QIA) until August of this year. The QIA then sold its holding to Lebanon’s oldest lender Fransabank for $153m.

Corporate loan involvement

Al Khaliji has also been quick to get its corporate loan business up and running in a matter of a few months. The bank rubbed shoulders with some of the region’s biggest players such as local heavyweight the QNB as well as the likes of the National Bank of Abu Dhabi and the Standard Chartered Bank in its participation as a mandated lead arranger in a five year syndicated term loan for Qatar Telecom.

The $2.5bn transaction attracted the involvement of 20 banks and, after receiving heavy interest in general syndication, the facility was eventually lifted by $500m to $3bn when it was closed in early November, with Al Khaliji’s contribution to the arrangement being $135m.

Future progress

Although Al Khaliji has clearly made genuine strides in the short time since its IPO, there is no doubt the opening of its first branches will bring extra clout to its position in Qatar’s banking sector. At the present time, to many prospective clients, it is at best a relatively nebulous entity.

It is hoped the first branches will open very shortly and Al Khaliji is determined to ramp up its services in the retail and small to medium sized enterprise (SME) segments in the next few months.

Its efforts in the SME sector will bring it into direct competition with Qatar’s biggest bank, the QNB, which has also recently rolled out its own QNB Business Banking unit. But Al Khaliji’s senior management will be more than aware that the banking industry right across the Gulf is keenly competitive with lenders fighting for greater market share and also looking to aggressively widen their reach into foreign territories.

The QNB, for example, is in the process of a phased increase of its share capital in order to drive forwards its regional and international expansion programme. But Al Khaliji, with a sizeable capital base for a start-up bank of almost $1bn and a senior team well-versed in the machinations of the Gulf’s banking sector, is well-positioned to make further inroads of its own in due course.

See also:
The Al Rayan Bank ventures into Saudi
Qatari lenders look to join the spending spree