Plans for a three-way merger between Islamic lender Masraf Al Rayan, Barwa Bank and the International Bank of Qatar (IBQ) have been shelved; however, an alliance between Barwa and IBQ is reportedly close to being announced.
The three-way merger plans had been on the table since December 2016. A statement was issued last week to say that the three banks “could not reach an agreement to complete the transaction”.
Although the statement did not reveal the reasons for the abandonment, Reuters reported that client concerns about converting IBQ into an Islamic lender had created disagreements over valuations. Under Qatari regulations, a bank cannot act as both a conventional and Islamic lender.
The merger had been welcomed by analysts, rating agencies and the central bank due to the view that there are currently too many local and international banks serving a relatively small market. There are 18 banks in Qatar.
This argument was strengthened by the current diplomatic blockade that Qatar is enduring at the hands of its neighbours, Saudi Arabia, UAE, Bahrain and Egypt. There are fears the blockade will harm Qatar’s banking sector.
©2018 funds global mena