Qatar is “overbanked” and there is a need for consolidation in the banking sector, the head of one of the country’s lender’s told Arabian Business. “We believe that the country is overbanked… There are around 18 banks, with the local banks, Islamic banks and the foreign banks, for a total population of 1.7m,” George Nasra, managing director of International Bank of Qatar (IBQ), one of the fastest growing banks in the Gulf, said in an interview in Doha. “We estimate that the bankable population is around 600,000, so that is why we think the country is overbanked. I think it is time for consolidation basically,” he added. IBQ was itself the focus of a potential merger with rival Al Khaliji Commercial Bank but the merger fell through. “The process had reached an advanced stage and we had conveyed this to the Qatar Financial Markets Authority. But it fell through as the evaluation was not acceptable to either of us,” Al Khaliji chairman Sheikh Hamad bin Faisal bin Thani al-Thani told reporters earlier this year. Nasra agreed with the Al Al Khaliji boss’s assessment, but has not ruled out further talks with any other potential bidders. “We disagreed on the valuation unfortunately, but we will continue to look for opportunities. We are open to all alternatives, if it makes sense for our shareholders and the banking industry.” While the bank is 30 percent owned by the National Bank of Kuwait since 2004, Nasra has ruled out did rule out merging with a large international global banking brand as it is his aim to keep the bank local and independent. “I don’t think [we’d agree to an international buyout]. We want to be the last surviving entity.” Qatar is set to host the FIFA World Cup in 2022 and Nasra believed the estimated US$65bn worth of projects due to be announced by the government may help give a boost to the banking sector. “At the macro level we are on the verge of a major boom, an economic boom, because most of the mega infrastructure projects, whether they are related to FIFA or now, are on the verge of being signed and will come to the market probably in the first or second quarter of next year,” he said. “The railway, several highways and the new port… at the economic level you will see major economic activity pick up from next year. In terms of finance for these projects, historically, Qatar goes for project finance when they have joint ventures, such as the recent US$4.2bn syndicated loan to finance the Barzan gas field, which is a joint venture between Qatar Gas and Exxon Mobil. “The banks provide contract financing for contractors who are undertaking the projects. On top of that, the banking sector is profitable and well capitalised and capable of provided the finance for these projects… As a banking sector, this year’s net profit of the sector grew by about 22 percent. The sector continues to grow at what is probably the highest in the Gulf.” IBQ’s growth is even higher than the Qatar average of 22 percent. Last year, it made a profit of QAR573m (US$157m), a year-on-year rise of 25 percent. This is one of the highest growth rates in the country’s banking sector, beaten only by market leader the Qatar National Bank, which grew 32.5 percent in the same period. In a bid to capitalise on the boom Nasra is beefing up the bank’s finances in order to secure as large a slice of the World Cup as possible. He said he has plans to issue US$750m in bonds in the third quarter of 2012 and he also has plans afoot to boost the bank’s available capital. “We increased our capital last September by a QAR1bn (US$275m) and we have plans to increase by a further QAR1bn by September this year so it will get to be QAR5bn of shareholders’ equity,” he added.