Qatar eyes major stakes in seven European banks

Zawya: Qatar is considering buying major stakes in investment banks in Europe. Negotiations are underway with seven banks suffering from accumulated financial crises due to economic recession in Europe, reported Al Arabiya News.
Qatari delegations are leading broad negotiations to widen their investment portfolio in Luxembourg, in order to diversify their income generating investments, the report said.

Widening of investments in the foreign markets by Qatar’s investment authority is part of Qatar’s strategy to diversify the sources of income, away from gas and fuel sectors, which contribute 55 percent of Gross Domestic Product (GDP). Qatar Holding invested its budget surplus in the past two years in foreign lucrative projects, which sets a record for the investments in Europe.

The global economic crisis, which hit the United States and the European Union and other industrialised countries, contributed in creating many investment opportunities that fit with the aspirations of countries aiming at long term investments, such as Qatar’s investments in real estate, foreign companies, manufacturing plants, banks and even fashion houses.

“Europe suffers from economic recession and aims at attracting foreign investors, and Qatar is one of the countries that can benefit from these opportunities,” Basheer Al Kahlout, an economist told Al Arabiya in an interview.

As for the cost of the sovereign bonds issued by Qatar and used in expanding its investments, al-Kahlout explained that the cost is extremely minimal compared to other bonds in the Gulf, which favors the opportunities of borrowing in the actual time frame.
Qatar foreign investment in 2011 reached $6.027bn, as per UN investment conference report for 2012, with an increase of 223.5 percent in 2010, which was estimated at $1.863 bn. It is likely that these investments will contribute to creating future jobs in recipient countries, along with boasting the well needed reserves of foreign currencies in these countries, in the context of the actual economic crisis.

The International Monetary Fund expected a 6 percent growth of the Qatari economy in this year, noting that the expected growth in the next four years will be done through non-oil or energy sectors, the report said.