It is thought that negotiations are focusing on a proposed capital increase by ABQ, which will have NBK as the sole participant and will see the Kuwaiti banking giant taking a 40 per cent equity position. Details of the pricing or the structure of the capital increase have not been revealed. MEED estimates that a 40 per cent capital increase priced at book value would be worth about QR 150 million ($41.2 million). Given the return to health of ABQ and the limited points of entry into the Qatari banking sector, it can be assumed that NBK will be asked to pay a premium.
It is expected that NBK will seek to take over the management of the bank, which it has been eyeing as an acquisition target for some time (MEED 1:2:02).
ABQ has become an increasingly attractive prospect in recent months. A major restructuring programme has seen the bank return to profitability. Net income of QR 64.1 million ($17.6 million) was posted for 2002, compared with break-even in 2001 and losses of QR 202 million ($55.5 million) in 2000. The bank has improved the quality of its loan book and enforced a strong provision policy: at the end of last year it had the highest non-performing loans coverage ratio in the Qatari banking sector, at 82 per cent.
Shareholders’ equity has also expanded after the drawdowns of previous years, reaching QR 252.4 million ($69.3 million) at the end of last year. This figure includes a proposed dividend of QR 18.2 million ($5 million).