Qatar bank wins approval to buy $601m UAB stake
Abu Dhabi, September 23, 2007
Commercial Bank of Qatar won initial central bank approval to buy a stake in a United Arab Emirates lender for $601 million, entering the second-largest Arab economy as it expands in the Gulf.
Commercial Bank, Qatar's second-largest lender by market value, won the approval from UAE and Qatar central banks to buy 40 percent of Sharjah-based United Arab Bank (UAB) for 7.75 dirhams per share, UAB said in a statement received on Sunday.
The price is a 7.8 percent premium to UAB's closing price on Thursday.
UAB, based in the third-largest member of the UAE federation and a neighbour of Dubai, had 711.72 million shares outstanding on March 21, according to Reuters data. The deal will be completed by the end of November, UAB said.
"Qatar Commercial is looking to diversify out of Qatar and the UAE is the obvious place to do it," said Raj Madha, a banking analyst at EFG-Hermes investment bank Dubai.
"There's very strong growth in the economy in terms of lending."
The UAE's population is 4.1 million, compared with Qatar's 907,000.
Gulf Arab banks, buoyed by the economic windfall of record oil prices to the Gulf states, are increasingly looking outside their home markets where greater competition is encouraging them to expand through acquisitions and branch expansion.
National Bank of Kuwait, the Gulf's third-largest lender by market value, in August agreed to buy AlWatany Bank of Egypt with a $522 million bid, its second international purchase since in three months.
"It's all part of a growing trend of cross-border bank investments in the Gulf," Madha said.
Shares of UAB surged as much 4.2 percent in early trading on Sunday to 7.49 dirhams, driving the Abu Dhabi index higher.
Commercial Bank said in August it had won approval from "major" UAB shareholders to buy a minority stake in and manage UAE, though it still needed central bank approval.
The purchase could be Commercial Bank's biggest since it bought a 34 percent stake in National Bank of Oman two years ago.
Commercial Bank chief executive officer Andrew Stevens could not immediately be reached for comment on Sunday.
UAB has nine branches, including three in Dubai and one in Abu Dhabi, according to its Web site.
France's Societe Generale helped start the bank in 1975 with UAE investors, managing it until 2005 when it sold out, and the bank listed its stock in Abu Dhabi, according to its 2006 annual report.
Commercial Bank reported record profit in the second quarter, spurred by higher lending, fees and commissions.- Reuters