Private banking FirstRand has finally offloaded subsidiary Ansbacher Group to the approval of all involved. The sale to Qatar National Bank (QNB) of the group, which provides financial services to high-net-worth clients internationally, was completed in November, opening a door to the lucrative and expanding high-net-worth market in Qatar.
According to Datamonitor, affluent individuals make up 8.4% of the adult Qatari population, a far higher proportion than any other Gulf Cooperation Council state. Indeed, the national bank estimates GDP growth for 2004 to be 16%, which, with a population of less than 700,000, makes Qatar one of the world’s wealthiest countries.
Its growing wealth is encouraging the Qatar authorities to look at initiatives to help the state become a financial centre – particularly in the areas of wealth management and project finance. One project being considered, for example, is the development of Qatar as an international financial centre. So the acquisition of Ansbacher should put QNB in an excellent position. A senior executive at a private bank says: “It may seem an unusual match, but it’s an extremely clever deal.”
For QNB, the acquisition gives it access to international markets. Ansbacher CEO Richard Spilg says: “QNB already has a 50% share of the domestic market – where do you go from there? There was some frustration as, while clients’ domestic needs could be answered by the bank, when the client started to look internationally they were unable to help. So over the last couple of years, they have been thinking about international expansion, and decided it would be easier to take the acquisition route than try to grow organically.”
Growing wealth
With Ansbacher’s presence in London, Switzerland, the Channel Islands and the Caribbean, the deal has opened up QNB to the offshore Arab market, and, closer to home, the tie-up will enable QNB to tap into the growing wealth in the Middle East. One of Ansbacher’s four lines of business is private banking specialist lending such as yacht financing and property development, and it is an area expected to be of particular interest to wealthy clients in the Gulf. Saeed Al-Misnad, QNB Group CEO, says: “QNB has an extremely large and growing high-net-worth client base for whom it needs to develop wealth management products and solutions; Ansbacher is the ideal partner to meet those needs. It fits in with QNB’s ambitions to become one of the top five banks in the Middle East.”
South African bank FirstRand agreed in 2002 that the needs for scale in international markets for Ansbacher did not fit its domestic focus, and since 2003 has been looking for suitable buyers. Spilg says: “It has taken away the uncertainty of parentage that has been hanging over our heads, and we now have a parent company that is committed to growth.”
The tie-up will also prove useful in responding to two growing areas in the international market and Qatar itself. Qatar’s experience in Islamic banking will help Ansbacher respond to the growing demand for Shariah-compliant products in the UK and in Europe. Ansbacher’s experience in investment management will help QNB to respond to the new mutual fund legislation in Qatar. But the tie up is not without its financial risks. As a report by Fitch points out: “[The deal] will put pressure on the cost-income ratio [for QNB]. A key factor for the successful integration of this acquisition will be the ability of QNB to grow its high-net-worth client base and revenues to offset the impact of higher costs and the drag on profitability.”
