Fitch: Qatar National Bank acquisition of CBI stake is positive

"We view the acquisition favourably as it fits in with QNB's stated strategy of building a MENA-wide franchise" says Mahin Dissanayake, Associate Director in Fitch's Financial Institutions team.

"UAE was one of the few major markets in which QNB did not have a presence and it is very likely that CBI will continue to focus mainly on mid-corporate and retail business, which should help to diversify QNB's earnings and asset mix."

The price paid, around USD302m or 2.7x book value, is financed entirely from internal resources and will not, in Fitch's opinion, affect QNB's credit profile. QNB says that it will have three seats on CBI's board and will be actively involved in the risk and audit committees of the bank. CBI is a mid-sized retail and corporate bank, with assets of USD3bn at end-2007 with 12 branches across the UAE.

QNB is the largest bank in Qatar, with assets of $42bn and net income of $258m reported in H108. It is 50% owned by the state-owned/controlled Qatar Investment Authority. QNB is a full service bank and is active in retail, corporate and investment banking, treasury, wealth management, and Islamic banking. QNB has a wide international presence with branches in London, Paris, Oman, Kuwait and Yemen and representative offices in Libya, Iran and Singapore. QNB also holds a 50% stake in the Tunisian-Qatari Bank, fully owns the London-based Ansbacher Group and a 31% stake in Jordan-based, The Housing Bank for Trade and Finance.

QNB's ratings are Long-term Issuer Default (IDR) 'A+' with Stable Outlook, Short-term IDR 'F1', Individual 'B/C' and Support '1'. The Support Rating Floor is 'A+'.