Doha Bank Chief Executive Officer (CEO) Raghavan Seetharaman feels that the global expansion plans of the Qatari banks are justified and would be advantageous for the country on many counts, such as improving trade opportunities by identifying suitable business partners, attracting foreign direct investment and also helping local banks to enhance the full range of services across wholesale, retail and treasury for the benefit of customers.
What is the reason for Qatari banks opening more branches in other countries whose projected growth rates have been lowered by various rating agencies in the last two years?
Qatari banks benefit from healthy capitalisation and strong growth momentum, supported by high confidence in the Qatari market from investors and businesses around the world.
Seeking growth beyond the home market is essential to sustain the growth momentum for the Qatari banks, which see the long-term potential in various trade blocs and economic fundamentals of countries before planning international branch expansion.
“Qatari banks benefit from healthy capitalisation and strong growth momentum, supported by high confidence in the Qatari market from investors and businesses around the world.”
CEO, Doha Bank
Challenges such as slowing growth, rising inflation, geopolitical tensions and changes due to the monetary policies of central banks in advanced economies will be reviewed and monitored periodically both from short- and long-term perspectives.
Doha Bank has always maintained strategic plans that seek growth in external markets that are major bilateral trade partners with the GCC. This strategy is directly related to the needs of the clients who seek a financial partner in their global evolution. The strategic location of each Doha Bank branch and representative office around the world is secured based on bilateral trade trends, demand and opportunities for supporting the needs of entities across markets. The opportunities come both from Qatar and the GCC region and from other far-flung economies, that are seeking to do business with Qatar and the GCC economies.
Is this move (opening more branches) aimed at helping Qatar to attract foreign investors to park their funds in the country?
The opportunity to host the FIFA World Cup in 2022 will create opportunities to form strategic alliances externally and to connect to global value chains. Hence Qatari banks that have a global presence will improve its connectivity for tapping more business. Improved connectivity may result in attracting foreign players into Qatar and not just investors. Qatar is fortunate to have a strong and stable government with commercial laws that encourage investment, as well as an economy that is witnessing growth and diversification. Qatar’s favourable corporate tax laws also support the business plans of many foreign investors and institutions. We must also remember that many Qatari brands are seeking similar multinational growth and these investments are bidirectional, particularly in key sectors. The branches of Qatari banks including Doha Bank will be in a position to channelise foreign investments and also serve the corporate sector in those markets and in Qatar simultaneously.
What future do you see for Qatar banks that decide to expand their operations globally?
The main objective of global expansion is to look for cross-border opportunities arising from bilateral trade and investment. Once branch expansion happens, a full range of services across wholesale, retail and treasury can be provided for the benefit of the customers. It enables banks to spread their business and risks beyond the host country. The international branches of the Qatari banks will also help the Qatar banking market to adapt and/or to enhance their product range and other specialised banking services.
Doha Bank has a presence in those countries which have major bilateral trade partnerships with the GCC and plays a crucial advisory and financial support role to key clients and investors. Doha Bank acts as a financial partner and is capable of bringing together multinational expertise and tailoring solutions for Qatari and foreign clients seeking to establish and build their presence in the respective markets. We play a strong advisory role and act as a partner that can facilitate their success. The bank ensures the availability of cross-market nuances to ensure business continuity. These include financial planning, liquidity management solutions and trade finance services such as guarantees based on financial position.
How much foreign direct investment is needed for Qatar to further improve its growth rate to achieve the desired objectives of Qatar National Vision 2030?
According to the Qatar National Development Strategy (QNDS), during 2011-2016, total gross domestic investment may reach circa QR820 billion, out of which the government’s investment is expected to touch QR347 billion, the private hydrocarbon sector QR84 billion and the private non-hydrocarbon sector QR389 billion. Gross investment is expected to average 25% of GDP over this period.
There are various sectors where FDI is needed to support economic diversification. According to United Nations’ “World Investment Report 2013”, the inward fund flow into Qatar saw a marginal increase of 0.6% taking it QR1.1 billion ($327 million) in 2012.
Qatar’s diversification will require further FDI in various sectors. Qatar has a clear vision for the future and is on its way to fulfilling this vision, so the quality of the investment and the expertise it brings with it is also important, apart from the actual investment. With sport, education, hospitality and other key sectors differentiating Qatar’s approach to economic diversification, the state remains a unique destination in the region for foreign participation.
While some banks are going global, will the retail business, which is expected to witness robust growth in the coming years due to an influx of expats, be captured by the banks which have no plans to go overseas?
Retail is a segment which will grow on account of influx of population into Qatar, as its economy witness diversification. According to the QNDS, the population in Qatar expected to grow steadily at an average of about 2.1% during 2011-16. Most of the Qatari banks will continue to penetrate the Qatar retail market irrespective of global presence. In a global and digitally connected world, people are looking for advanced digital banking channels and access to services.
For expatriates, these include services such as remittance and money transfers from their computers and mobile devices from wherever they are. Doha Bank’s digital banking channel is one of the best and with offering remittance services with banks and financial institutions across countries viz; India, Sri Lanka, Bangladesh, Pakistan, Nepal, the Philippines, Indonesia, Egypt, Lebanon, Yemen, Turkey, Jordan, Oman and Ethiopia from where most expatriates originate