Qatari market over-banked, says HSBC MD

Doha: Although Qatar market looks very attractive it’s very difficult to penetrate, says a top banker.

“Business from London to Hong Kong works the same way, but not here. In Qatar it takes a longer time to build relations and you need to be very patient, things move slower here,” said Jody Sanderson, HSBC Managing Director and Head of Global Banking, who has been working in Asia, North America and in the Middle East.

One of the problems of the Qatari market and of the GCC in general is that it is over-banked.In the UK there are 4 banks serving 60 million people, while in the GCC there are 50 banks for 5-6 million people.

“This market is highly over-banked. For a consumer this is a great situation because there is a lot of competition, but at the end of the day you want a strong and healthy banking environment, and too much competition can lead in a negative situation, ending up with banks that can not invest properly because they are not profitable.

This is something that you wouldn’t want; a banking sector that is so competitive that the banks are unprepared to invest further to serve the customers the way they need to,” said Sanderson, categorising Qatar as one of the most competitive banking market in the world.

HSBC has been working in Doha for 60 years and now has 450 people operating in the country; these numbers give an idea of the stature of the presence of HSBC bank in Qatar and of the comprehensive knowledge that the bank now has of the local market.

The bank over-population is just one of the problems of the regional market.“There is still a need to improve a regulatory architecture, corporate governance, and reduce red tape and bureaucracy,” said Omar Mehanna, Managing Director, MENA Head of Advisory for HSBC.

The MENA market is relatively very small as it represents only 1 percent of the global market, but it has been penetrated by European banks.

“Twenty percent of the Middle East and North Africa syndicated loan financings are provided by European banks, but it’s still early to see the impact of the euro crisis in the Gulf,” said Mehanna.

In his opinion to recover from the eurozone crisis, the European Union should establish structural reforms as a fiscal union within the eurozone countries, and the European central banks should launch a comprehensive purchase bund programme.

He said that some argue that the global financial crisis could have been avoided if banks had abided by Islamic rules that forbid investment in collateralised debt obligations and other toxic assets.

“The proliferation of certain financial instruments, which existed pre-crisis, played a role in increasing the magnitude of the crisis, but Islamic financing has its issues and was not immune to the crisis,” said Mehanna.

The Peninsula