Emir formality

20 December 2016 By Andy Critchlow

Three Qatari banks have become the latest in the region to explore merging. They won’t be the last. Exposure to volatile crude and hard-up state owners could trigger more consolidation of the sector in 2017. Governments will exit their charges – and ease their budgetary holes.

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Masraf Al Rayan, Barwa Bank and International Bank of Qatar have entered initial talks regarding a possible merger, Reuters reported on Dec. 19.

A 25-percent drop in oil prices over the last two years to below $55 per barrel on Dec. 20 has prompted governments in the Gulf Co-operation Council to reform their economies, make steep budget cuts and sell off or restructure assets.

Majority state-owned National Bank of Abu Dhabi and First Gulf Bank received approval in July to merge and create the largest lender in the United Arab Emirates.

Barwa Bank is majority-owned by Qatar's government, while state-controlled funds hold 27.4 percent of Masraf Al Rayan. International Bank of Qatar is private but has senior member of Qatar's ruling family including Sheikh Hamad bin Jassim al-Thani - the former head of the Qatar Investment Authority - as major shareholders, Reuters reported.

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