Qatar’s Doha Bank Plans Capital Raising In 2015

Doha Bank plans to raise additional capital in 2015 to underpin fast asset growth and potential acquisitions, the chief executive of Qatar’s fourth-largest bank by assets said on Wednesday.

The bank is looking at several options to raise capital, such as a rights issue, CEO R. Seetharaman told reporters at a news conference in Kuwait.

“If our organic expansion is per the growth model we envisage, then we will need additional capital, which we will mobilise next year,” he said.

Both Doha Bank and Commercial Bank of Qatar may need to raise as much as QAR1.5 billion ($412 million) of Tier 1 – or core – capital in 2015 to help meet stringent limits set down by the Qatar Central Bank, Morgan Stanley said in an analyst note this week.

While Qatari banks have formally adopted Basel III international regulations this year, Morgan Stanley expects Qatar’s central bank to impose higher capital requirements that could go up to 16 per cent of risk-weighted assets in 2019.

Doha Bank’s asset expansion was more than 20 per cent last year and will continue to grow Seetharaman said, citing the lender’s new licence in India. Doha Bank will be commissioning a new branch there in six months time, he said.

“It could be a strain or a stress on the capital adequacy if the (asset) growth is over 25 per cent,” said Seetharaman.

He said the QAR1.5 billion estimate from Morgan Stanley was speculative and that the amount would depend upon the bank’s balance sheet and potential acquisitions.

“It is not necessarily QAR1.5 (billion). If I have an acquisition opportunity, perhaps I may go faster,” he added.

Doha Bank already raised its Tier 1 capital in December through a QAR2 billion bond issue.

It followed that with the acquisition of HSBC Bank Oman’s Indian business last month for an undisclosed sum.