Qatari banks set to play a greater role in project finance

27 January 2010

Local institutions to replace international rivals wary of long-term loans

Qatari banks are poised to play a greater role in financing domestic projects as a result of international banks becoming more wary of providing long-term loans following the financial crisis.

Senior banking figures in Qatar say they expect to play a greater role in financing projects in the future.

“Many international banks have withdrawn from project finance because of problems from the global financial crisis,” says George Nasra, managing director of International Bank of Qatar (IBQ). “Qatari banks now will play a more prominent role.”

Salah Jaidah, chief executive officer of Qatar Islamic Bank (QIB), agrees and says there is also likely to be a rise in the use of Islamic bonds (sukuk).

“We expect about 30 per cent of project financing to be allocated to sharia-compliant structures, through sukuk or Islamic loans, so there is definitely a role for QIB in that,” he says.

However, while Qatari banks are expected to deploy more resources to financing projects in the country, there will still be a need for international banks to play a major role.

“The financial services sector in Qatar is not big enough to finance all the projects that are planned, so the door needs to be open to international banks,” said Khaled Yousef Alderbesti, director at the Business & Trade Ministry, at MEED’s Qatar Projects 2010 conference in Doha on 26 January.

The next Qatari project to seek commercial funding is expected to be the Barzan project, which will supply gas to the domestic market. The Royal Bank of Scotland is currently working on structuring the deal.

In total, Barzan could require up to $8bn to develop, spread across several phases.

The last Qatar project to reach financial close was the $4bn Ras Laffan C power and water scheme, which was completed in August 2008. The banking group for that project only included two Qatari banks, Qatar National Bank and QIB.

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