Qatar Natl buys into UAE bank in consolidation sign

DUBAI Wed Aug 27, 2008 3:01pm EDT

DUBAI (Reuters) - Qatar National Bank QNBK.QA said on Wednesday it bought 24 percent of Dubai's Commercial Bank International CBI.AD for $302 million, the latest sign that regional banks will consolidate to compete in a Gulf economic boom.

Supported by a more than five-fold rise in oil prices since 2002, profits of Gulf banks have surged on growing demand for credit from state and private investors to finance billions of dollars of infrastructure, real estate and industrial projects.

Faced with growing competition from global players, lenders in the biggest oil-exporting region are turning to consolidation to help them better compete and diversify their revenues.

"This strategic stake is to broaden the network of QNB outside of Qatar," said Andrew Duff, head of international banking at QNB, the biggest bank in Qatar, the world's biggest exporter of liquefied natural gas.

Qatar National bought 297.69 million shares, or a 23.77 percent stake, in Commercial Bank at 3.70 dirhams. The stock, listed in Abu Dhabi, soared 7.72 percent to 3.66 dirhams on Wednesday.

"In a country like the UAE booming as it is, everyone would like to participate in what's going on in the country," said Alfred Fayek, director of EFG-Hermes' Gulf institutional desk.

"Some big-name banks would like to come here but they can't get licences. It is better to buy a small bank." Commercial Bank operates 12 branches in the UAE, the world's fifth-largest oil exporter and second-largest Arab economy.

The Gulf state's economy is expected to expand 7.9 percent this year in real terms, according to analysts polled by Reuters in July.

Some 45 banks operate in the country of 4.5 million people, according to central bank data. The biggest, Emirates NBD ENBD.DU, operates 115 branches -- itself resulting from the merger of Emirates Bank International and National Bank of Dubai last year.

CONSOLIDATION

QNB Chief Financial Officer Ramzi Marie said QNB had no immediate plans to increase the stake. The bank's profit jumped 71 percent in the second quarter.

"For now, this is where we stand," he said. "This will give us a very important place in the UAE."

Gulf Arab banks have been expanding abroad as competition intensifies in their home markets, and small UAE lenders are prime targets.

Last year, Commercial Bank of Qatar COMB.QA bought a near 35 percent stake in Sharjah-based United Arab Bank UAB.AD, while last week Global Investment House GLOB.KW of Kuwait said it would buy 20 percent of National Bank of Umm al-Qiwain NBQ.AD.

Qatar National aims to boost foreign operations' share of profit to as much as 30 percent within five years, expanding in the Middle East and Africa, Chief Executive Ali Shareef al-Emadi said in January.

The bank, which owns a more than 30 percent stake in Jordan's Housing Bank for Trade & Finance THBK.AM, plans to begin operations in Syria, Sudan and Mauritania this year, and in March took over the government's stake in Tunisian-Qatari bank.

The Qatar Investment Authority, the Gulf state's sovereign wealth fund, owns about 50 percent of Qatar National.

(Additional reporting and editing by Thomas Atkins)