Changing Business Models for Globalization

MEED

Dr. R.Seetharaman, Doha Bank Group CEO participated in the Qatar Banking Summit held on 08th October 2012, at Oryx Rotana Doha, Qatar. He spoke on “Strategies to accelerate growth in International Markets“. The event was attended by Qatar Central Bank Governor, regional bankers, industry experts and Business professionals.

Dr. R.Seetharaman highlighted the Global opportunities for Qatari Banks. He said “Qatar attracts the attention of global multinational companies and conglomerates in Asia for business. The market has become global and is not just local. This unleashes immense opportunities for Qatari banks to establish strategic alliances and partnerships with foreign banks from all over the globe to participate and financing these investment/business opportunities. For example, the contractors from China, Japan, Korea and Turkey while bidding for multibillion dollar contracts in Qatar will bring in the banks from the respective countries for financial support. It pushes the Qatari banks in the forefront to collaborate with the top banks from these countries for business relationships. We have established presence in all these countries with the first mover advantage and established relationships with top banks.” He also said “the opportunities should be exploited in establishing relationship with the foreign banks that are interested in the domestic business and establishing offices in the respective growth countries such as China, Singapore, Korea, Japan, Turkey, London etc, to expand our reach to capture the trade flows and business opportunities over there that enable us to diversify our portfolio with quality assets and risk dispersion. We saw the oppurtunities a decade back and hence took Doha Bank to Singapore and turkey in 2006. This was followed up by setting up a representative office in Tokyo and Shanghai in 2007.We also expanded on the regional front with the opening of branches in Dubai and Kuwait. After the Global financial crisis we slowed little bit in our international expansion and then opened our representative office in Germany in 2011.”

Dr. R.Seetharaman explained how Qatari banks can position themselves to develop their assets in international markets. He said “Qatari banks can position itself to capture the opportunities available domestically where the foreign multinational contractors secure multibillion dollar contracts. It provides us opportunities to have bonds/guarantee exposures to the top foreign banks that issue back-to-back guarantees for securing contracts not only in Qatar but in UAE and Kuwait as well. By extrapolating our relationship with these banks and having presence in these growth oriented countries, Qatari banks could diversify its assets with quality business. Qatari banks have option to expand in international markets. This can be through Organic growth or through Acquisitions. Acquisition has to be done selectively depending on the growth oriented markets and where synergies can be established with Qatar and or GCC. Participation in syndicated loans in select markets is another option.”

Dr. R.Seetharaman highlighted the challenges in expansion strategies in international markets. He said “The challenges are shallow in-depth local market knowledge, risk prudence and Conservative approach, Legal system and practice in respective countries, governance and transparency and capital requirement requirements in various markets will also pose challenges to institutions wishing to expand. Adverse economic and financial conditions of the rest of the world can affect the domestic banking sector through negative spillover effects. This contagion effect is considered as the most important disadvantage of cross-border banking”.

Dr. R.Seetharaman also highlighted the growth strategies for Qataris Banks in international markets. He said “the growth opportunities are enormous in the international markets but at the same time it also brings in the underlying risk. Therefore the Qatari banks have to exercise due care in building international business. The thumb rule for international business strategies is to have through market knowledge of the respective country. He also said to identify and source for such businesses that satisfy QCB guidelines and the internal policies and risk appetite of the Qatari bank. His emphases to have specific strategy for exit and recovery of assets and select acquisition is surely an option to grow in international Markets provided pricing is correct. With correction taking place in International markets where MNC banks are selling and exiting there exists an opportunity to Qatari banks to grow by acquisition. Identify key growth oriented markets which has synergies with GCC and ASIA which will be the engine of growth for the next 10 years. Identify the expansion through either organic and acquisition route given the regulatory requirements and through various options open to the bank and the list of institutions available. Determine the best fit considering the capital availability and the extent of management that one can provide if such acquisitions have to be done and properly managed”.

In his closing remarks Dr. R. Seetharaman highlighted that “Changing Business models are required for globalization.”