DOHA – Qatar's banking sector, the fastest growing in the world in the past decade, is ready to rise to the challenge of financing an expected $100 billion boom in the country's projects industry until 2022, according to MEED, which is hosting the Qatar Banking Summit scheduled on Sept.10-11, 2013 at the Renaissance Doha City Centre Hotel. “We are talking about a huge scale of infrastructure financing requirement,” said the head of corporate banking at International Bank of Qatar (IBQ) Bhupendra Jain. “The metro alone is going to be about $35 billion and the Port project is estimated at $7-8 billion. Then there are roads, electricity and water, sewage, Aviation City, the stadiums for the World Cup plus hotels, new shopping malls, Lusail City etc. The bonding requirements for these projects will be a percentage of these numbers and that's a very complex algorithm. We expect infrastructure finance demand will be in excess of $100 billion.” Leading global and regional experts on the projects and finance industries speaking at the summit will confirm that Qatar's financial sector has indeed enough liquidity to provide the capital and project finance required to deliver mega projects in the country in the years leading up to 2022 and beyond. Already, Qatar's financial sector has been a key foundation of its still rapidly developing economy, with finance, insurance and reinsurance outputs now accounting for about 10 per cent of the country's GDP last year. Moreover, total assets for Qatar's banking industry increased at a compound annual rate of 30 per cent in the last 10 years to almost $225 billion, while bank lending to domestic customers grew by a similar amount in the same period to $130 billion. Bankers say they expect the aggregate balance sheets of Qatar's banks will continue growing as government investment in projects flows to construction companies and other service providers. Huge further increases in deposits with local and international banks operating in Qatar are also expected and will be provide huge leverage for domestic borrowers. Qatar Central Bank Governor Abdulla Bin Saoud Al-Thani will deliver the event's keynote address where he is expected to provide a comprehensive overview of the latest initiatives Qatar is implementing as part of its aspirations to become a leading financial hub in the Gulf region. This will be followed by a comprehensive overview of Qatar's project finance and banking sector, with dedicated panels discussing the most attractive opportunities and strategies that lending institutions and stakeholders can adopt in order to succeed in Qatar's lucrative banking sector from a lenders' perspective; as well as sessions on infrastructure finance, where speakers will examine the challenges and capital market options for financing mega projects. “Project finance stakeholders will have access to the latest information on infrastructure financing, and gain a better understanding of the implications of emerging risks as well as which capital market options (from sukuk and syndications to PPPs and IPOs) are the best way forward in funding mega infrastructure projects,” said Edmund O' Sullivan, Chairman, MEED Events, organizer of the Qatar Banking Summit. Equally important, attendees will have an inside track on how to leverage opportunities offered by Sharia-compliant banks, which are now playing a growing role in meeting the soaring demand for construction and project finance; in addition to being able to examine new approaches for infrastructure financing, such as project bonds, Private Finance Initiatives (PFI) and refinancing. An emerging issue is the capacity of local banks to absorb the volume of business being generated by the major Qatari projects. When asked whether Qatar's financial system is geared up to absorb these flows, Jain says yes. “That is why we will increasingly see local banks coming together to finance these large projects. Regional and foreign banks are also increasingly coming in to get a share of the action in Qatar,” he added. Despite the massive activity currently taking place in Qatar's projects industry and its continued rise in the next few years, there is a consensus among experts that the country's regulators should manage the timing of major infrastructure finance transactions, which will also be discussed in the summit. “I estimate the value of infrastructure required worldwide to 2030 is roughly equal to global GDP today,” said Anthony Holmes, co-founder and director of the Institute for Infrastructure Studies. “This is beyond the capacity of the global financial system to deal with. If we are going to do all that, we will have to find a different system for financing projects and ration the finance. Another factor is that infrastructure spending is not distributed evenly across the world. One of the concentrations of infrastructure spending is in Qatar. This will deliver a skewed distribution.” The Banking Summit is supported by the Qatar Central Bank, Qatar Financial Markets Authority and Qatar Financial Centre Regulatory Authority. — SG
