Qatar National Bank’s (QNB) bid this year to buy Turkey’s DenizBank from the Belgian group Dexia is a harbinger of a new banking strategy by the Gulf state. The goal is to build an emerging-markets lender of the calibre of Brazil’s Itaú by 2017.
QNB says it will start expanding in the Middle East, before growing in sub-Saharan Africa after 2014. This will inevitably involve acquisitions, possibly alongside Qatar’s sovereign wealth fund.
Sceptics will say QNB lacks coherence. DenizBank’s best franchise, for example, is in small and medium-sized businesses. QNB’s strengths lie elsewhere, in wholesale and trade finance. QNB’s purchase of Bank Kesawan in Indonesia last year hardly fits into the Middle East and Africa.
Other doubters say QNB lacks experience and expertise, but Qatar has proven success in other sectors, particularly in emerging markets. Take Qatar Telecom in markets such as Iraq and Palestine, or Qatar Airways on routes from Benghazi to Cape Town.
Consumers in countries closest to Qatar have had more choice thanks to firms such as these – or indeed Qatari-owned satellite channel Al Jazeera.
Why not in banking? Qatar has little more than will and money, but these are the main ingredients. Saudi Arabia, for example, lacks the domestic political leeway to deploy capital internationally, particularly after the Arab Spring. Abu Dhabi has capital and a degree of will.
Last month, National Bank of Abu Dhabi (NBAD) announced the departure of Michael Tomalin, chief executive since 1999. A new CEO might quicken foreign expansion but NBAD’s international strategy could be even less coherent and its advantages weaker in its target markets – for example, Australia and Brazil.
QNB’s emergence in 2011 as the Middle East’s biggest and most profitable bank might be largely attributable to Qatari state backing. However, its 70% growth in trade finance revenue last year is more a result of an international network, which since 2005 has grown to 18 countries in the Middle East and Africa.
Today, less stable or more cash-strapped governments – either in Europe or the Middle East – will discourage their banks from venturing abroad. So, more than ever, the world needs lenders with strong equity backing and wide international networks to drive trade and investment.
Nowhere is this truer than in the Middle East and Africa. Thanks to high commodity prices and economic liberalization, potential in these markets is now unprecedented – but they still have risks that European banks cannot brave.
