Qatar's CBQ Is Said to Plan Capital Increase in Turkish Unit

11/10/2017 15:25 AST

Commercial Bank of Qatar QSC is planning a capital increase of as much as $1 billion in its Turkish unit to expand in the country, according to people with the knowledge of the matter. The Doha-based lender is seeking to raise between $500 million and $1 billion from existing shareholders of Alternatifbank AS and international financial institutions, the people said, asking not to be identified because the talks are private. CBQ bought a 71 percent stake in Alternatifbank in 2013 and increased it to full ownership in 2016.

“Alternatifbank is adequately capitalized and we have no immediate plans to increase Alternatifbank’s capital,” the banks said in a joint statement.

CBQ is growing its business in Turkey to benefit from rising profit levels and a surge in lending. The country is currently caught up in a diplomatic row with the U.S., with the two nations suspending visa services for each other’s citizens. Qatari lenders are also under pressure after a decision by Saudi Arabia, the United Arab Emirates and Bahrain to cut economic and diplomatic ties with Qatar in June.

Alternatifbank has enough capital and “possible changes in our capital will be assessed in line with commercial and economic needs,” the bank said in an earlier statement. CBQ has always seen its subsidiaries having enough capital as “a principle.”



Restructuring

CBQ is restructuring its business after completing a 1.5 billion-riyal ($404 million) rights issue in the first quarter. The lender last month said it plans to hold talks to sell its $215 million stake in Abu Dhabi-listed United Arab Bank PJSC. The bank expects provisions to remain elevated for the next few quarters, Chief Executive Office Joseph Abraham said in April after its first-quarter net income slumped 68 percent.

Alternatifbank, Turkey’s 19th-largest lender by assets, increased its capital by 27 percent to 980 million liras ($264 million) in February. Its capital adequacy ratio was 20.2 percent at the end of June, while its core capital adequacy ratio was 9.22 percent.

Bloomberg