Qatar banks headed for more mergers | Banking – Gulf News
Qatar's overbanked system could see more consolidation triggered by pressure on banks' profitability from the coronavirus pandemic according to Fitch Ratings.
The rating agency said while banks with weaker franchises and limited pricing power are likely to prompt the next wave of consolidation, common government ownership is also a key driver to create better capitalised banks with enhanced competitive advantages to support the Qatar Vision 2030 development plan.
Al Khalij Commercial Bank (AKCB) and Islamic bank Masraf Al Rayan's (MAR) recently agreed merger will potentially create Qatar's largest Islamic bank by total assets and diversify MAR's business model, which is predominantly wholesale focused. This will be the second merger in Qatar between an Islamic bank and a conventional bank after Islamic bank Dukhan and International Bank of Qatar (IBQ) merged in April 2019.
Despite a weaker economic environment and expected downward pressure on valuations from the impact of the pandemic, AKCB was valued at QAR8.2 billion representing 1.14 times its tangible book value, compared with 1.027 times tangible book value for IBQ.
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