DOHA: Doha Bank yesterday got shareholders approval to raise up to $5bn through Certificate of Deposits (CDs) and Commercial Papers (CPs). The Ordinary General Assembly, held at its headquarters, agreed for the Bank to issue CDs worth $3bn and CPs worth $2bn.
“There is no doubt that the substantial decline in oil prices has adversely affected all economic sectors including the banking sector and market liquidity. Therefore, many banks resorted to issuing debt bonds and instruments to overcome this problem. In this context the bank is planning to issue CDs within a program of up to $3bn and CPs within another program of up to $2bn as per the salient features specified under each programme,” said Sheikh Fahad bin Mohammad bin Jabor Al Thani, Chairman, Doha Bank addressing the shareholders.
The Bank will issue CDs either through an SPV guaranteed by the Bank or directly by the Bank as part of its product suite.
The total minimum amount per certificate will be $1m or equivalent and maximum $1bn or equivalent.
The tenor and interest rates would be determined as per the market conditions.
It will issue CPs either by an SPV guaranteed by Doha bank or directly by the Bank through a Euro Commercial Papers programme.
The minimum amount per issuance would be $50m or equivalent and maximum would be $1bn or equivalent. The maximum tenor would be up to one year.
“Despite the difficult circumstances, we were able to achieve good growth rates in most of the financial indicators as we have achieved a net profit of QR1.4bn by the end of 2015 and a net profit of QR354m by the end of first quarter of 2016,” said the Chairman. The CDs and CPs can be issued to local as well as international investors and in Qatari riyal or in various major currencies.
“We need to do due diligence and after the shareholders’ approval is received, may be in two months time we will be ready, depending upon the market conditions internationally. The funds are required to reduce the maturity mismatch for which we required long term liability. It is good to strengthen the balance sheet by balancing the assets and liabilities,” said Dr R Seetharaman, Chief Executive Officer, Doha Bank.
“It is going to help us in liquidity, lending and reduction of average cost of funding. Because once you have a long term borrowings there will be a stable functional flow. When there is a interest rate hike tomorrow on account o global growth or the US Federal Reserve decision, we will have sufficient cash flows to support,” he added.
