The decision by the Central Bank of Qatar ordering conventional banks out of the Islamic finance market has helped Qatar’s newest Shariah-compliant lender become the Gulf state’s fastest growing bank.Barwa Bank
was among the first to benefit from the QCB’s surprise ruling last year, instructing conventional banks to close their Islamic windows. In what was later deemed Qatar Deal of the Year by Islamic Finance News, the bank simultaneously boosted its customer base and expanded its network from one branch to six by acquiring International Bank of Qatar’s Al Yusr Islamic retail banking operations in August last year.
In June this year, it won the award for Fastest Growing Bank in Qatar at the Banker Middle East Industry Awards, and in September was named Fastest Growing Company at the Arabian Business Qatar Awards.
“We have seen a reduction in competition in a market that is growing faster than conventional banking,” says CEO Steve Troop. “It is a great place to be, and we intend to realise the opportunities as much as we can.”
With authorised capital of QR6 billion ($1.6 billion), and total equity of QR5.1 billion ($1.4 billion), Barwa Bank offers a full range of financing services in retail, business, corporate and private banking.
The velocity of the bank’s rise is reflected in its financial results for 2011, which recorded a 882 per cent rise in net profit to QR244 million ($67 million), compared with QR25 million ($6.86 million) in 2010. When the bank launched a QR1.7 million ($467 million) rights issue last year to fund expansion, its offer of 109.1 million new shares to existing shareholders was oversubscribed by 13 percent.
Barwa Bank is an associate company of Barwa Real Estate, the Middle East’s biggest property company by assets, which is its most significant shareholder. It also has an indirect relationship with Qatari Diar, the real estate arm of the Qatar Investment Authority, through its other prominent shareholder, Qatar Holding, the sovereign wealth fund’s investment subsidiary.
These are important connections for the bank. “We are committed corporate bankers, so we are involved very much in lending to large corporations and businesses here in Qatar,” says Mr Troop.
Barwa Bank’s investment banking arm, The First Investor (TFI), raised financing for the $700 million CityCenterDC development in Washington DC, one of the largest urban rejuvenation projects in the United States, for which Qatari Diar is the anchor investor. TFI has also started a property fund in Brazil as a joint initiative with the US-based Hines International Real Estate Holdings.
At home, Barwa Bank participates in Qatar’s economic development, including working with Hochtief, the German construction company, based in Essen. “Much of the activity is associated with major infrastructure projects, but not exclusively,” says Mr Troop.
The bank has also developed a strong focus on assisting small and medium-sized enterprises (SMEs), and was one of the first to sign up to Qatar Development Bank
’s Al Dhameen scheme for start-ups, an indirect lending facility to guarantee commercial bank loans to the private sector.
Mr Troop says that at present Barwa Bank is essentially a domestic institution, but its long-term ambitions will eventually see it establishing offices beyond Qatar’s national boundaries.
“We have lots to do before we think about expanding internationally. I would stress, however, that we are ambitious and wish to grow. We can only go so far in this market, and inevitably we will go international,” he says.
Meanwhile, since establishing its Islamic Capital Markets platform earlier this year, the bank has emerged as a key player in the growing market for Shariah-compliant bonds, known as sukuks.
In September, it was appointed co-lead manager for the Republic of Turkey’s first sukuk, a $1.5 billion issue, following its involvement in high-profile sukuks for the Government of Dubai, the State of Qatar, Saudi-based Islamic Development Bank, and real estate developer Emaar Properties.
Bloomberg Islamic Finance league tables rank Barwa Bank among the top 10 arrangers for international, global and MENA region sukuk issues.