What is the scope of Deutsche Bank’s operations in Qatar?
JAIDAH: We’re trying at Deutsche Bank Qatar to showcase all the activities of Deutsche Bank globally. We've been looking at various initiatives that are somehow attractive to our markets and specifically to Qatar. One of the main areas we looked at is CIB, Corporate Investment Banking. Definitely there is a big ambition to be built up here, relying on the surplus that is going to be generated by the economy and the ambition of the State of Qatar to venture into a variety of activity outside its borders. We also looked at the wealth generated by the families. Private wealth management is an area of concern for us. We are making sure we are well positioned relative to the other lead players. So we are definitely going to promote this going forward. We also looked at the global transaction activity which is very interesting. Deutsche Bank has been known to be the lead clearer for Euros. We are also one of the top three clearers for dollars. For us, to position ourselves and take advantage is nothing new. But we’re going to hopefully take further activity as the nation grows its import requirements. So we’re doing quite a sizable amount of activity and taking advantage of the full platform.
How competitive is Qatar's wholesale banking sector?
JAIDAH: Wholesale banking is a very interesting area for growth. Any new comer has to have long-term thinking and has to have an ability to go through the learning curve. But I think it’s very lucrative and definitely can add further value to the industry and to Qatar itself. We've been part of the GCC and whoever flew through Bahrain wanted to stop-over in Qatar. Whoever saw a UAE transaction said, why not check out Qatar? I would say over the last 8 years, the story has changed totally. The initiative of QFC has given a different angle in terms of the surplus that has been generated, the vision, and the leadership direction in the global activity. We definitely stand firmly now within the GCC, if not within all of MENA, as a lead player. All banks are looking positively at Qatar. It is definitely challenging.
At present, what is the level of constraint on interbank lending?
JAIDAH: If you look at Qatari interbank activities, it’s been definitely positive. Everybody reckons that they’re going to be supported ultimately. They are all sound within their own means. There is a confidence and trust in between them. In some of the GCC countries, there has been an indication that the regulators and that the ultimate sponsoring of the state will be there. On a global basis, it’s very challenging. I think you will see banks shying away from each other. There partly is a lack of confidence on what is going to happen next for certain regions and certain countries. So banks would prevent from putting themselves in a cost-relation kind of placement and will concentrate, even at the loss of gain, and put it with the central banks, which act like a safe haven. I think each region will have a different level of activity. I’m familiar with the Malaysian business banking sector. There has been trust and I think in selective bases in each of these countries you will see a level of trusting behavior between the banks. But I would agree that on a global basis, it is going to be challenging and it will continue to be challenging.
What is your outlook for bond issuance in 2012?
JAIDAH: I think the bond market, and the sukuk market, is going to go through an interesting rally. We think that Europe will still look positively at lucrative transactions with mid-term maturities. I think they would like to see an add-value on the equity, so convertible will probably be looked at more positively, if there is a story for MENA and the GCC, that there is an upside on the equity. I would see sukuks becoming more dynamic going forward. There is a need for the sukuk market to be active because financial institutions that are working within Islamic banking are urging themselves to be there, advising transactions, underwriting transactions, and trading on the trading platforms. Hopefully we will be playing a lead position in this. We see ourselves well-positioned at Deutsche Bank. We have looked at it very positively through the years and we've got what it takes to be mandated by some newcomers or new issuers, which we will see from the sovereign all the way to the corporate. You will see tremendous activity taking place. The first months of the year are positive, and there has been a quite sizable transaction in the market. That’s a good sign for us and we will definitely stand behind and support that industry.
How has the international financial crisis changed project finance in the region?
JAIDAH: Project finance has really been a challenge. I think the whole business model is changing. Financial institutions are going to take an angle; project finance advisory is going to take an angle; and project infrastructure advisory is going to take an angle. Combining all that with the ambition of the clients and the directions of the clients and their willingness to push up the time-frame, you will still see attractiveness and dedicated teams to support these initiatives. You have head counts, you have cost implications, and you have dedicated teams overlooking project finance. Project finance, from the concepts, to the blueprints, to the executions, to the actual funding, takes a while. Whoever wants to enter project finance, seeing themselves as an advisory on the financial structure of the project developments, sees a huge gap and that gap has really kept banks quite shy from the activity which is taking place in project finance. Having said that, we definitely see that infrastructure, the roads, the ports, the airports, are all lucrative transactions for banks, from various angles. We collaborate with project finance advisory teams. We try to work closely with the clients to understand exactly what they need on the project finance advisory side and we try to complement their initiatives by providing alternative angles.
How has the current economic situation in Europe impacted emerging markets?
JAIDAH: I think Europe played a strong role in funding some of the transactions, on the advisory side and underwriting transactions; all that is going to go away. With it being taken away, I think the region is going to have to rely on itself. That will be challenging for a while. Long-term funding is not the name of the game here but they are going to have change attitudes and look at it positively. I think we will see that happening positively going forward. But definitely Europe going through difficulty is something that we need to have an eye on. Short-term, it did not reflect; mid-term, it would; long-term it will be very sensitive. Hopefully there will be a recovery soon. We see positive signs coming out of the US. Whether that will reflect positively in Europe is still an open question. It will require some more time.
I think Europe played a strong role in funding some of the transactions, on the advisory side and underwriting transactions; all that is going to go away. With it being taken away, I think the region is going to have to rely on itself. That will be challenging for a while. Long-term funding is not the name of the game here but they are going to have change attitudes and look at it positively.
What is your general economic outlook for the State of Qatar?
JAIDAH: The way forward for Qatar, in terms of economic outlook, looks definitely positive. Qatar will stand firmly relying on the success story that they have created over the last few years. We will still see GDP growth relying on oil prices and the surplus generated out of the export of oil. There will be challenges away from the oil and gas but it remains to be seen how actively the projects are going to be coming on board. We see a lot in the blueprint now. They’re talking about a lot of initiatives and I see some of them coming forward this year or next year. That’s probably addressing the private sector away from oil and gas. If we look at financial institutions, I think the double digit growth is going to be challenging. Single digit growth is acceptable globally. But for Qatar, relying on double digit growth, this is going to be challenging. The dynamic of that is going to be changing when the private sector starts mobilizing and taking further advantage. I would definitely look at it positively compared to what’s going on in the region and globally.
How do you see Qatar’s economic diversification process proceeding?
JAIDAH: I think we’re going to constantly rely on cheap energy. We are going to diversify within the lines of oil and gas. We might not be in the streamline of the development of oil and gas but we’re going to take advantage of these surplus resources that we can reemploy and venture into alternative industries that can rely on the energy but do something else, like we have seen with the aluminium smelters. On the private sector, there has to be a dynamic. I think service oriented firms are going to advantage of the growth that Qatar is going to see. The typical trading houses are going to re-energize and reposition themselves and become elite regional players, otherwise their business model is going to be challenged going forward. The semi-supported firms are going to take advantage. Some of them are a single provider of the services so they are going to take a lead on their capabilities. They are going to have an edge and hopefully they’ll re-position themselves to grab further business outside Qatar, which some of them are doing positively going forward.
Financial institutions are probably going to face the challenges of the double digit growth but that doesn't mean that won´t be doing well. On specific breakdown of financial institution activities, if you look at the corporate side, they will definitely take advantage of the growth that some of the private sector will be seeing, especially on infrastructure projects. SMEs are yet to be energized but there will be activity there. There is a definite commitment from the government and from the Minister of Commerce to support that industry. I foresee that this will develop relying on the new generation of entrepreneurs that are coming. It’s a small size but it should be recognized because we’re building for the future. On the retail, there is saturation and there is a cap so they have to be more creative. Expansion beyond borders for Qatari financial institutions is something that is in the horizon. We see the elite players are looking positively and they understand what to pick and when to pick. Some newcomers are going to be venturing and hopefully they will select the right ones and the right geographic coverage that they can complement their existing operations and add further value for the success story that they have done in Qatar.