World Cup Pie: Why Some Want a Bigger Slice
Anchor, CNBC (EMEA)
Qatar's billion-dollar spending spree in preparation for the 2022 World Cup is bringing fresh business to companies of most shapes and sizes. But the chief executive of Doha Bank, the country's fifth largest by market value, is calling on the government to take a more active role to ensure "equal opportunity".
"Everyone should take part in the infrastructure momentum. And it means dividing government business," Raghavan Seetharaman, CEO of Doha Bank, told CNBC's "Access: Middle East."
Construction sites have sprung up across the small Gulf nation, carving out the groundwork for future football stadiums, roads,bridges, hotels, even a new city. A report by Qatar's "General Secretariat for Development Planning" estimated infrastructure projects to amount to $130 billion in the run-up to the highly coveted football event. But some lenders,such as the Qatar National Bank (QNB), are much better positioned to capitalize on these plans due to larger capital base and market share.
"We are requesting the government to look objectively and see how to allocate this business pie," he added.
The leverage of sovereign wealth funds in the world's leading liquefied natural gas exporter, such as Qatar Holding and the Qatar Investment Authority (QIA), could help level the playing field. The latter holds a close to 17 percent stake in Doha Bank, as well as other Qatari banks,and more famous for buying into global heavyweights such as Credit Suisse, the London Stock Exchange and French football club Paris St Germain (PSG) to name a few.
"All Qatari banks get significant benefits from the sovereign wealth funds. They generate lots of business on the assets side,"Mahin Dissanayake, Director EMEA Financial Institutions at Fitch Ratings,explained to CNBC.
But with 13.8 percent in the third quarter of last year,Doha Bank still has a lower capital adequacy ratio than its peers and is close to the minimum ten percent set by the Central Bank of Qatar (CBQ). A rights issue in the first quarter of 2013 is meant to remedy the situation, and support expansion plans into emerging markets. The bank aims to raise capital by some 50 percent, equivalent to $1.6 billion, although the exact execution,whether private placement, GDR or a domestic rights issue had not been decided.
"They are less well-equipped compared to others because they focus more on retail, and even after a capital increase, there is a limit to single party exposure," Jaap Meijer, Director of Equity Research at Arqaam Capital, told CNBC.
Seetharaman admitted that was currently the case, but remained hopeful authorities would balance out the allocation of projects. Analysts have also been divided as to whether the QIA would guarantee the unsubscribed part of a potential rights issue. For the CEO of Doha Bank, it was "their call", noting that their intention was "very visible".
Doha Bank is not the only local institution seeking to tap debt markets in preparation for the lending that is expected to ensue, and foreign banks are keen to get a slice of the action too.
Seetharaman shrugged off suggestions of political risk in the country given its geographic location in midst of a region in turmoil,saying "political stability is guaranteed".
"Look at the statesman role Qatar has played. Lebanon,Libya, or today Syria. They played a significant role. That shows clear commitment".
This week on "Access: Middle East": An exclusive interview with Raghavan Seetharaman, CEO of Doha Bank.Tune in to see what he has to say about investing in Qatar, why the world is due for a double-dip recession, and bow ties make a fine gentleman.