QNB’s Finansbank deal gets thumbs-up

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Moody’s Investors Service said in a report yesterday that Qatar National Bank’s (QNB’s) planned acquisition of Turkish lender Finansbank AS offers advantages for the group, but the acquisition will expose the bank’s asset quality to downside risks.

These risks will remain manageable given QNB’s capital buffers, which will be restored following a planned capital injection and contributions from its strong earnings, offsetting the impact of higher credit costs post acquisition, Moody’s added.

“Finansbank is a good strategic fit for Qatar National Bank,” Moody’s said. “Its balanced portfolio among various sectors and a well-established presence in the Turkish market offers high long-term growth potential.”

The transaction is due for completion the end of June. It will mean about 30 percent of QNB’s operations will be in Middle East and North African markets that are riskier than Qatar’s.

Moody’s expects Finansbank will contribute to QNB’s earnings growth due to the higher net interest rate margins in Turkey.

Finansbank will contribute around 16 per cent to the group’s post-consolidation assets, 16 per cent to loans and 12 per cent to deposits.