Qatari banks merge to create second-largest lender in the region

By Rahul Vaimal, Associate Editor
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Al Rayan Bank
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Qatar’s Masraf Al Rayan and Al Khalij Commercial Bank have signed a merger agreement to establish a leading Shariah-compliant regional bank, which will be the second-largest lender after Qatar National Bank (QNB).

According to the reports, the agreement will see Al Rayan issue 0.50 of its shares for each Al Khaliji share, reflecting a 21 percent premium over Al Khaliji’s closing price as of January 5 and the value of the deal will be $2.2 billion (8.2 billion Qatari riyals).

The share exchange will leave Al Rayan as the remaining legal entity and establish one of the largest banks in the state of Qatar and the Middle East that complies with Islamic law, with combined assets of approximately $47 billion, said the people familiar with the matter.

The chairman of the merged body will be Ali Bin Ahmed Al Kuwari and, Sheikh Hamad Bin Faisal Bin Thani Al-Thani will act as the vice-chairman.

Mr. Al Kuwari said, “This is a landmark transaction that will contribute to the State of Qatar’s economic growth, vision and ambitions and is a testament to our commitment to creating a more robust Qatari banking system.”

The combined entity will have an enhanced presence in Qatar and selected international presence, which will help achieve market-leading cost efficiency, increase future growth potential and have considerable synergy potential that could accelerate value creation for shareholders.

Re-establishment of relations

The announcement comes the same week that Saudi Arabia and its three Arab partners decided to restore diplomatic and trade relations with Doha at the Gulf Cooperation Council (GCC) summit in the kingdom. The restoration of trade with neighbors is expected to strengthen Qatar’s economy, which has significantly strengthened trade ties with Turkey, Iran, and Pakistan since the imposition of sanctions in 2017.