Rare Cross-Gulf Bank Tie-Up May Strengthen With Qatar Lender Bid

Qatar’s third-biggest lender is looking to build a controlling stake in National Bank of Oman as meager expansion opportunities at home drive financial firms to seek out growth farther afield.

Commercial Bank of Qatar QSC has offered 49.43 million rials ($128 million) to raise its holding by 15.2% to 50.1%, according to a regulatory statement Thursday. The proposal to acquire 247 million shares represents a 18% premium to NBO’s closing price of June 2.

NBO’s shares rose as much as 9.5% in Muscat, the biggest intraday jump since January. The stock is heading for the highest closing price since the start of the pandemic last year. CBQ declined as much as 0.7%, underperforming the broader market.

Rare Cross-Gulf Bank Tie-Up May Strengthen With Qatar Lender Bid

Qatar’s banks, boxed in by limited options in the nation of 2.8 million, are expanding across the Middle East, spurred on by the normalization of ties between Doha and neighboring Gulf states in January.

Besides its presence in Oman, CBQ fully owns Alternatifbankin Turkey and has a stake in United Arab Emirates-based United Arab Bank. Its purchase of a 34.9% holding in NBO in 2005 marked one of the first cross-border alliances between banks in the Gulf.

Lenders in the oil-rich region are also combining locally after the twin shocks of lower energy revenues and the global coronavirus pandemic. Qatar’s Masraf Al Rayan QSC and Al Khalij Commercial Bank PQSC agreed to combine earlier this year. Saudi Arabia’s largest lender last year bought Samba Financial Group in one of the biggest banking takeovers of 2020.

What Bloomberg Intelligence says:

“CBQ is derisking local exposure to property and contracting sectors, selectively growing government lending to improve its risk profile and focusing on improving international operations profitability in Turkey and Oman. Any diversity they get from Turkey is being wiped out by the Turkish lira’s depreciation so they are pushing growth in Oman while taking impairment charges on UAB to bring it more fair value level for potential disposal.”
-- Edmond Christou, a financials analyst

CBQ’s common equity Tier 1 ratio stood at 11.7% at the end of the first quarter. National Bank of Oman posted a 65% drop in its net income last year.

Read more: Gulf Lenders Prepared for Lira Turmoil, But Bill Is Mounting

“Over the last few years, CBQ has been working to further expand NBO’s profitability -- and a controlling stake would provide further push to this objective,” Citigroup Inc. analyst Rahul Bajaj said in a report. Bajaj expects the transaction to be dilutive initially.

Expected timetable:

  • Offer announcement: June 3
  • Record date (for purpose of the offer): June 9
  • Offer period opens June 10, closes July 11
  • Offer manager: Ubhar Capital

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