Moody’s: Proposed Merger between Masraf al Rayan and Al Khaliji to Enhance Scale and Market Share

According to international credit rating agency Moody’s Investors Services (Moody’s), the planned merger between Qatar-based banks Masraf al Rayan (MAR) and Al Khaliji Commercial Bank (Al Khaliji) is expected to have a larger Islamic franchise and market share, which should support greater pricing power, and hence profitability. Further, the larger scale would also assist in containing funding costs by enhancing deposit-gathering capabilities.

The banks’ individual strengths will benefit the merged entity’s product diversification, states Moody’s. Since both banks concentrate on retail banking, Moody’s notes that the merged entity will have adequate scale to support the retail banking...