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Public Private Partnership, Financial Stability Driving Forces For Qatar's Banking Industry

Doha, April 10, 2011: The strong continuing support from the Qatar Government which was reflected in Qatar Investment Authority 's acquisition of 10 per cent in Qatari banks in the beginning of the year has strengthened the financial position of these financial institutions, a senior Doha-based banker said.

Speaking at `The Business & Investment in Qatar Forum' held in New York on April 6 and 7 2011, Mr. R. Seetharaman, Chief Executive Officer, Doha Bank , said that this significant move has put Qatari banks at the forefront in working towards implementing the requirements of the Basel Committee.

Speaking on the regulatory reforms in Qatar and GCC financial industry at a forum on `finance and Banking at the event, Mr. Seetharaman said that Qatar already has plans to implement Basel 3 by 2013, five years ahead of the stipulated deadline.

"Qatar is also working towards a single regulator. With this initiative, Qatar follows an international trend toward an integrated approach to the regulation of different financial services products and activities. In GCC we have seen the single regulator only in Bahrain," he said at the forum attended by top International and Arab Bankers, economists and business professionals.

Mr. Seetharaman explained the current scenario prevailing in the global economy and the basic challenges economies face in moving from crisis to stability. "Global economy is expected to grow at 4.4% in 2011.In Feb 2011 the G20 agreed indicators for measuring imbalances include public and private debt and level of private savings. The sovereign risks are mainly at Euro zone. In March 2011 the European Union announced of a permanent $700-billion safety on concerns from Portugal," he said.

Giving his economic outlook on Qatar Economy, he said: "The National development strategy 2011-16 will balance challenges of Qatar's National vision 2030. Qatar economy is expected to have a robust growth in 2011 and a broadly favourable economy in the next 5 years."

"Beyond 2011 real GDP growth can drop as current investment in hydrocarbon decrease gets completed. Aggregate GDP growth in 2012-2016 is expected to average to 6.9%, out of which Hydrocarbon GDP growth will be by 4.4% and Non- Hydrocarbon GDP by 9.1%. Overall fiscal position is expected to be healthy with a surplus of 5.7% of GDP by 2016 and current account balance will remain high at 15% of GDP by 2016.Even if average oil price is at $74 per barrel, average Nominal GDP level of Qatar would shrink to 2% by 2016 and with Govt planning to diversify its income over period, adverse fiscal impacts would be dampened," Mr. Seetharaman said.

Mr. Seetharaman while highlighting the industrial trends in Qatar stated that "Services is going to be the major driver. By 2016 service sector could account for 40% of total output up from 36% in 2009.Transport and communications, financial services, could grow vigorously. Potential is also seen in construction and manufacturing. FIFA world cup 2022 may provide oppurtunities in tourism and other areas. World cup will create oppurtunities to form strategic alliances externally and to connect to global value chains."

Mr. Seetharaman provided his opinion on the investment and savings trends in Qatar and stated that "During 2011-2016, total gross domestic investment might be about QR820bn out of which Private non-hydrocarbon sector is expected to be QR 389bn. Investment of Qatar -based companies in next 5 years is QR 130bn. Non hydro- carbon investment is also driven by Qatar government companies. After 2012 5% points of additional public sector investment spending would be needed to generate 0.5 % point temporary acceleration of growth in non-hydrocarbon output. Gross investment is expected to average 25% of GDP over 2011-16.Gross national savings are likely to remain above 40% of GDP through 2014, but might edge down in the later years. Population expected to be steady - grow at an average of about 2.1% in 2011-16.The rapid population growth of the recent past is not expected to continue. Qatar's budget 2011-12 has a surplus of QR 22bn and focuses on education, health care and infrastructure projects"

Mr. Seetharaman also gave his opinion on recent banking trends in GCC" In Qatar lending and funding in foreign currency has increased in recent times. Private sector has shown revival in recent times. Qatar and Oman banking sector reflected healthy trend in 2010. In the near future improvement in Net interest income and decline in provisioning is expected in GCC banking industry. Banks in Kuwait, Oman, Qatar and Saudi Arabia to benefit from infrastructure development"

Mr. Seetharaman also gave insight on investment oppurtunities in GCC "The Price earnings and Price Book multiples of Qatar exchange are still attractive when compared to emerging economies. Abu Dhabi and Qatar banks provide good investment oppurtunities. Petrochemicals are also good segment to consider for investment apart from banking due to higher capacity utilization in the industry. Insurance industry is also should be watched in Qatar, Kuwait and Saudi Arabia".

In his concluding remarks, Mr. Seetharaman said "The public-private partnership model and measures towards financial stability will be the key drivers to GCC Banking industry".

-Ends-

About Doha Bank
Doha Bank is the largest private commercial bank in the State of Qatar. It was incorporated in 1978 and commenced its banking business (including its International Banking services) in Doha, Qatar on March 15, 1979.

As one of Qatar's leading financial services company, Doha Bank is committed to making banking work for customers and clients like it never has before. Through innovative technologies and the ingenuity of its people, Doha Bank provides individuals and commercial, corporate and institutional clients across Qatar and even internationally, new and better ways to manage their financial lives. The company enables customers to do their banking and investing whenever, wherever and however they choose through an extensive network, and multiple access channels.

The Dubai branch of Doha Bank was opened in 2008.

For further information, please contact:
Ms. Tasneem Raza
Watermelon PR
Dubai, UAE
Tel: +971-4-2833655
Email: tasneem@watermelonme.com

© Press Release 2011