Published: October 20, 2011
New deals demonstrate the international ambitions of Qatari investors.
Awash with money and eager to invest, banks, investment firms and sovereign wealth funds across the Middle East have long been viewed as saviours for troubled Western institutions, with Qatar leading the way.
At the height of the crisis, in 2008, Qatar and Abu Dhabi took stakes in the UK’s Barclays. In August, Qatari investors backed the merger of Greek banks Alpha Bank and Eurobank. In late September, the state was rumoured to be in talks with BNP Paribas about an investment, speculation that the French bank vehemently denied.
Now, a Qatari investment firm is paying €1.05bn (US$1.4bn) to buy the private banking business of Belgian bank KBC. The deal will see Precision Capital, a Luxembourg-based vehicle set up by Qatari investors linked to the state’s royal family, take over KBL European Private Bankers (KBL epb) in a transaction expected to close during the first quarter of 2012.
KBL epb operates across nine European countries: Belgium, France, Germany, Luxembourg, Monaco, the Netherlands, Spain, Switzerland and the UK. As of July, it had assets under management of €47bn. The sale will release about €700mn in capital for KBC, resulting in a 0.6 % increase in its tier-1 ratio.
In a statement, Jan Vanhevel, KBC’s CEO, said: “The least we can say is that the market circumstances of the last few months have been particularly challenging - all the more reason why we are pleased to be able to announce today’s deal […] It is also reassuring to see that a Qatari investor recognises and values the strengths and potential of a European private banking group.”
During the same week, an unnamed Qatari investor agreed to buy Banque Internationale à Luxembourg, the Luxembourg-based private bank of troubled Franco-Belgian lender Dexia.
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Meanwhile, Qatar’s own banks are eager to expand. Some have initiated bond programmes that could lead to large debt sales in the coming months (see ‘The awakening’ on page 92). Others are busy growing their operations into neighbouring countries in an effort to boost business.
Investment bank QInvest, for example, which opened its doors in 2007, has set up an office in Turkey and, in late September, announced the opening of QInvest Saudi Arabia, which will offer managing, arranging, advising and custody services for corporate, institutional and high net worth individual clients. Led by CEO Khalil Ghalayini, the new business has paid-up capital of SAR50mn (US$13mn).
Banks such as QInvest should enjoy further opportunities to grow, whether at home or abroad. Recent government data shows that the state’s GDP grew by more than 30% last year, largely due to rises in gas prices. And with scant sight of an end to troubles for banks in developed markets, Qatar could yet save other beleaguered institutions from a fate worse than debt.