Qatar National Bank Set to Compete with Korean Banks in South-east Asia
Last updated on August 29th, 2020
South-east Asia is seen as a great site of attraction for banks worldwide. The high returns on investment in the region have lured not just western banks but the Middle Eastern banks too. In a recent announcement made by the Chief Executive Officer of Doha-headquartered, Qatar National Bank, the lender has stated plans to put Southeast Asia as the main focus point of its expansion in near future.
The announcement was made by CEO Abdulla Al-Khalifa in an interview with Bloomberg TV. Al Khalifa said, “Our focus really was the Middle East and then we expanded to Southeast Asia where we’re now focusing. If we find the right opportunity for acquisition, we will consider it.” Currently, there are no deals in review, but the CEO clarified that any prospect in near future will be seriously considered.
The US-Iran conflict has severely affected the oil prices, forcing Gulf lenders to think about business outside their home markets. Having purchased the National Bank of Greece SA’s Turkish unit and Societe Generale SA’s Egypt subsidiary, the Qatar National Bank has clearly initiated its further expansion. The blockade, started from June 2017, has curtailed the regional growth of the bank in parts of Saudi Arabia, Bahrain, the United Arab Emirates and Egypt.
Commenting on the need to expand outside Qatar, Al-Khalifa said, “If we find the right opportunity for acquisition, we will consider it.”
With a population of more than 2.8 million people, the country is rich in gas and oil resources. Making up for nearly half the market share, the Qatar National Bank, recorded good profits in 2019.
Post working as an acting CEO for 13 months and a trustable employee of Qatar National Bank for 13 years, Al-Khalifa was promoted to the position of CEO in December 2019. After recording a 5.6 percent advance in 2019, shares of the lender surged 1.7 percent this year.
On January 16, a spokesman claimed that the Gulf bank has issued a $600 million 40-year Formosa bond in an attempt to diversify its funding sources. Sold in Taiwan by foreign borrowers, the Formosa bonds are dominated in currencies other than the Taiwanese dollar. As per one of the sources, the deal offered Asian insurers and other-long term investors securities which match their own long-term commitments.
Besides Doha situated, Qatar National Bank, several Korean Banks are on a lookout for increasing business in the Asian region. Some banks like Shinhan have an established presence in more than 20 countries inducing China, Indonesia, Kazakhstan and Vietnam. As per analysts, most Korean companies see potential in South and Southeast Asia due to the geographical proximity and cultural similarity, which act as an aid in expanding business there.
Although seen as a region offering high investment returns, the business related risks surrounding banking sector in Southeast Asia should not be ignored. Going forward, banks like the Qatar National Bank and the South Korean Woori Bank must remain pre prepared for a slow and steady progress as the Asian finance sector, which is already flooded with the best Asian and Western Banks.
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