Qatar National buys 24% of CBI

The UAE-based Commercial Bank International (CBI) has sold 24 per cent stake to Qatar National Bank (QNB) for $302 million (Dh1.11 billion), 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 Qatar," said Andrew Duff, head of international banking at QNB, the biggest bank in Qatar, the world's biggest exporter of liquefied natural gas.

QNB bought 297.69 million shares, or a 23.77 per cent stake, in CBI at Dh3.70. The stock, listed in Abu Dhabi, soared 7.72 per cent to Dh3.66 yesterday.

"In a country like the UAE, booming as it is, everyone would like to participate in what's going on," 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."

CBI operates 12 branches in the UAE, the world's fifth-largest oil exporter and second-largest Arab economy.

The country's economy is expected to expand 7.9 per cent 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, says central bank data. The biggest, Emirates NBD, operates 115 branches – itself resulting from the merger of Emirates Bank International and National Bank of Dubai last year.

QNB Chief Financial Officer Ramzi Marie said the bank had no immediate plans to increase the stake. The bank's profit jumped 71 per cent 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 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 bought a 35 per cent stake in Sharjah-based United Arab Bank, while Kuwait's Global Investment House has said it would buy 20 per cent of National Bank of Umm Al Qiwain.

QNB aims to boost foreign operations' share of profit to as much as 30 per cent within five years, expanding in the Middle East and Africa, CEO Ali Shareef Al Emadi said in January.