Doha Bank shareholders yesterday approved the board’s proposal to issue bonds up to $2bn under Euro Medium Term Note (EMTN) programme as part of efforts to source cost effective long-term funds.
The lender also received approval for reducing the minimum amount per issuance of commercial papers to $1mn compared to $50mn in order to attract more retail investors.
“Since (customers) deposits are the only funding source available in the country, which are generally short term, the international market presents itself as the best alternative,” Doha Bank chairman Sheikh Fahad bin Mohamed bin Jabor al-Thani told shareholders at the annual general assembly meeting that also approved the 2017 results and 30% cash dividend.
To fund long-term growth and projects in the country, the bank needs to have a medium and long-term stable funding base, he said, adding such long-term funding would enable the bank to meet the regulatory requirements arising from Basel III ratios and also improve liquidity and interest rate profile.
“We have got blanket approval to raise up to $2bn within the next three years,” Doha Bank group chief executive Dr R Seetharaman told reporters on the sidelines of the meeting.
The proposed bond issuance would be in tranches and no single tranche should exceed $1bn, he said, adding the bank will tap the market at right time. It could be issued either by a special vehicle guaranteed by Doha Bank or through Doha Bank directly.
Highlighting that opportunities are around the world and Qatar is AA-rated country and Doha Bank A-rated and hence can go anywhere the funds are cheaper, he said it could be denominated in various currencies, including US dollar, euro, Taiwanese dollar, Australian dollar, Swiss franc, Japanese yen, Sterling pound and Chinese renminbi.
On the commercial papers, whose minimum issuance size was truncated to $1mn from $50mn, he said there are many small retail investors who are interested and small lots can be cost effective.
On the expansion into India, where Doha Bank now has three branches with the latest Chennai branch making soft opening recently, Seetharaman said new branch openings are possible at 12 locations, provided the present structure is converted into full-scale subsidiary.
The bank has enough capital to convert it but before that it wanted to build brand equity and then scale it up, he said.
The rules (regarding wholly-owned subsidiary) issued by the Reserve Bank of India in 2013 could expand opportunities for international banks in India since they would have greater freedom to open branches and be able to participate more in the development of the country’s financial sector.
The meeting also approved the appointment of KPMG as auditor for 2018 as well.
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