Qatar's Three-Way Bank Merger Is Said to Stall Over Price

(Bloomberg) -- Talks to merge three Qatari banks have hit a roadblock as shareholders, which include former Prime Minister Sheikh Hamad bin Jassim Al Thani, disagree on price, according to people with knowledge of the matter.

Masraf Al Rayan QSC, Barwa Bank QSC and International Bank of Qatar QSC had reached an initial agreement over pricing late last year that’s since fallen apart, the people said, asking not to be identified because the matter is private. Discussions are currently on hold and it’s not clear if the deal will be revived, the people said.

Qatar started talks in December 2016 to create the country’s largest shariah-compliant bank and the Middle East’s third-biggest Islamic lender with more than 178 billion riyals ($49 billion) of assets. The banks had aimed to complete the merger by the end of 2017. The tie-up will be done once regulators approve the deal, Masraf Chairman Hussain Al-Abdulla said in February.

Shares of Masraf, the only listed bank involved in the merger plan, closed down 1.7 percent to 35.69 riyals in Doha, the biggest drop in almost six weeks. About 780,000 shares traded, 69 percent more than its 30-day average.

‘Bad News’

The delay is “bad news, because the three banks combined would be able to compete better in the Qatar market,” said Sanyalak Manibhandu, an Abu Dhabi-based equities analyst at FAB Securities LLC. “Combining also provides opportunities to extract synergies from saving overheads, direct costs and investing in digitization.”

Before the deal stalled, shareholders had planned that Masraf would buy Barwa Bank and then IBQ would be folded in, the people said. The merged entity could have an equity value of more than $10 billion, one of the people said. Masraf and Barwa Bank didn’t respond to requests for comment, while IBQ declined to comment. A representative for Sheikh Hamad couldn’t be reached.

Billionaire investor Sheikh Hamad is the chairman of IBQ, while his son Sheikh Mohammad is the chairman and managing director of Barwa Bank.

Qatar, a country of 2.5 million people, has about 20 local and international banks competing for a share of business. Qatar National Bank SAQ is the Middle East’s largest lender with about $228 billion of assets, according to data compiled by Bloomberg.

©2018 Bloomberg L.P.

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