Salah Jaidah, Vice Chairman MENA & Chief Country Officer Qatar, Deutsche Bank
The regional vice chairman of Deutsche Bank offers his perspectives on the fit between oil and gas projects and Islamic finance, which has become a key growth sector for Deutsche Bank globally in recent years. He also discusses the role international banks can play in helping Qatar reach its development goals.
How can international banks such as Deutsche Bank contribute to the goals laid out in the Qatar National Vision 2030?
The Qatar National Vision 2030 is broken into four pillars: economic, human, social, and environment. The economic pillar is where Deutsche Bank can bring the most value. As a foreign firm, we bring our global capabilities and deliver them to the entities that we interact with: the Ministry of Finance, when it tries to raise funding; financial institutions when they try to interact with and use the services of international banks, the private sector when they explore activities beyond Qatar’s borders.
We also help Qatar and its companies to invest internationally, maximizing their advantage and creating sources of revenue for future generations. Qatar is keen to diversify its resources, and from that point of view, we have links to all kinds of mid-cap corporates in Europe, Southeast Asia, and North and South America; we can always advise on finding the best collaboration partners, and help to develop the mid-cap corporates.
Deutsche Bank is more limited in its activities when it comes to the human and social pillars of the vision, but two areas where we believe we can help are education and healthcare: Germany is very advanced when it comes to both, and we try to advise if it is required in those areas.
In the area of environment, Deutsche Bank is heavily committed. We understand how countries influence environmental issues, and we try to address them when we interact with our clients. Although we are not a key player, we adhere to the vision that has been addressed and we try to bring value to those areas of specialization that the bank can bring.
Which are the current areas of focus for Deutsche Bank in Qatar, from across its portfolio of products and services?
One of our key activities is verifying opportunities globally for the surpluses that Qatar wishes to invest, assisting in mergers and acquisitions, funding, evaluating and sourcing those deals. This is an activity we are very keen on.
On the other side, we are committed to encouraging global investors to look at the equity markets of the GCC and specifically Qatar, which are very attractive. We develop research on certain entities that are listed in the Qatari equity market, and we monitor the activity within the market very aggressively. We have also recently assisted with the IPO of one of the country’s state-owned assets, and that for us is definitely a direction to encourage investors to explore.
How much exposure does Deutsche Bank have to the oil and gas sector in Qatar today?
It is very difficult to specify numbers, but we have industry specialists globally, and from Qatar we tap into those resources when required. We have participated in some of the country’s oil and gas mega projects in the past, as a finance provider or an advisor in certain instances, and we have also assisted QPI in venturing further in their strategy to collaborate internationally on projects. QPI has its own methods of verifying strategic acquisitions; where we bring value is through due diligence, because we have market intelligence, product intelligence, and are very close to certain areas of the globe and can bring value on the ground. As and when that acquisition becomes a reality, we can assist in sourcing funding.
Are Islamic banking and the oil and gas sector a natural fit?
There is a lot of appetite in the Islamic banking market for investment in oil and gas infrastructure development: Islamic finance always addresses the underlying asset, which makes these types of projects an ideal fit.
For Deutsche Bank, Islamic banking is a solution, not a product. We look at it from the point of view of providing clients with alternative solutions for their ventures. Clients come with a variety of needs; one of them is funding, and when it comes to funding we can present alternatives, with one of them being Islamic financing. From this commercial point of view, we give the client the understanding of how to go about developing solutions for his needs. So we assist in structuring solutions and verifying sharia compliance.
This has given Deutsche Bank complete diversity in solutions in comparison to some other players, who have segregated Islamic banking into a separate business unit, or others that have kept it limited to particular locations. Deutsche Bank’s Islamic finance hub is in the MENA region for various reasons, but its reach is global, thanks to it being considered as a dedicated area of specialty globally, rather than a separate unit.
In Qatar specifically, we are proud to have brought a lot of added value to our clients. In the old days, Islamic structured products used to be more expensive, but we have made it more competitive in terms of pricing. In this way, we have positioned Deutsche Bank in a way that will give it a very strong future in Islamic banking, and at the same time allowed more people to take advantage of our solutions.
We also think that the MENA region, and specifically Qatar, is a hub of surplus acquisitions and finance. When it comes to verifying opportunities and finance in Turkey, Indonesia, Malaysia, or countries in Europe where there is an appetite for the Islamic structure, it is obvious that most of these fund providers are going to be in the MENA region: it is therefore an attractive hub to encourage the development of global reach, and take advantage of our local reach. We have mastered this because we are using the same platform as we use for our conventional reach.
What role can the banking sector play in helping to encourage Qatari entrepreneurs to take risks and set up businesses?
As Deutsche Bank we currently work exclusively with large corporates, so we only have limited exposure to SMEs. We cater for sovereign, semi-sovereign and the big oil and gas and family offices. We believe that as SME activities grow, it will be Qatar’s local banks catering for them.
However, there have been various discussions about aligning companies that are part of the European SME success story, in which Germany is a clear leader, and in developing the relationship between Europe and Qatar. A few banks have started talking about creating funds, relying on the SME growth that takes advantage of companies in Germany and other locations in Europe. There are also initiatives being introduced to encourage local SMEs to interact with European and specifically German companies, and try to create joint ventures. There is a limitation to what Deutsche Bank can bring in terms of typical banking services to Qatari SMEs, but whatever it takes to support those initiatives, we are trying to do, in terms of verifying information and relations.
What trends are shaping Deutsche Bank’s future ambitions and objectives when it comes to Qatar?
One of the most critical issues is the growing sophistication of client needs. As and clients’ needs change, and they start to look to new solutions, global banks will start to become more useful and bring more value. This has already been seen in a variety of markets, and I think Qatar will most likely follow this path: family corporates raising funding regionally; family corporates going public; the development of mergers and acquisitions.
The other area that Deutsche Bank will be able to bring a competitive advantage is in the expansion of Qatar’s financial institutions: cross border finance, growth in equity, and growth in regional M&A: all of these new activities will require advisors from international banks, not only because we can fund, but because we went through those challenges and can share our experiences with the local banks.
The third area is infrastructure: we would like to see that the upcoming projects in Qatar are successfully turned into profit-generating initiatives. This is already happening to some extent: Qatar’s airline project is moving towards profitability; the train project will start as a social service but will eventually have to have a platform of profitability; and although the roads and highways will most likely not be turned into profitable ventures, the port will be commercially driven. We are eager to see these infrastructure projects developed in a way that benefits society, and exploits the full potential of Qatar in the run up to the 2022 World Cup and the National Vision 2030, but we also want to assist in converting these projects into profit centers for Qatar.
To read more articles and interviews from Qatar, and to download EnergyBoardroom’s latest free report on the country, click here.