Qatari Banks May Reveal Merger Plan as Soon as This Week

(Bloomberg) -- Barwa Bank QSC and International Bank of Qatar QSC may announce plans to merge as early as this week, according to people with knowledge of the matter.

Talks between the two closely held banks are advanced, though they could still be delayed or fall apart, the people said, asking not to be identified because the matter is private.

Combining Barwa and IBQ would partially salvage a proposed three-way merger with Masraf Al Rayan QSC that was abandoned in June after 18 months of talks. That consolidation would have created 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.

Negotiations stalled, however, as shareholders, who include former Prime Minister Sheikh Hamad bin Jassim Al Thani, disagreed on price. Billionaire investor Sheikh Hamad is the chairman of IBQ, while his son Sheikh Mohammad is the chairman and managing director of Barwa Bank.

IBQ and Barwa didn’t respond to requests for comment. Credit Suisse Group AG is advising Barwa on the deal and IBQ has hired boutique investment firm Perella Weinberg Partners.

NOTE: Qatar Banks Abandoning Merger Is Credit Negative, Moody’s Says

The smaller merger will create a lender with about 82 billion riyals in assets, the sixth-largest in the country, according to data compiled by Bloomberg. Each bank was valued around $1.8 billion in two separate share sales in 2014.

Qatar, a country of 2.5 million people, has about 20 local and international banks competing for business. Qatar National Bank SAQ is the Middle East’s largest lender with about $232 billion of assets, and a market capitalization of about $41 billion.

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