A pioneering institution at the forefront of the meteoric rise of Qatar’s economy, The Commercial Bank of Qatar was established as the country’s first private bank in 1975.
Founded by a small group of enterprising businessmen, spearheaded by Hussain Alfardan, the Bank’s self-imposed mission was a challenging one: to introduce the concept of modern banking to a mostly unbanked nation.
The development of Qatar
Surrounded almost entirely by the sea, Qatar’s major industries from the 1700s onwards consisted of pearl fishing and trading. The introduction of the artificial pearl and the ensuing economic crash of the early 1930s resulted in a depressed economy in the region for decades.
Despite the discovery of oil in 1939, the Second World War delayed the exploitation of oil resources and exports. It was not until the 1970s that Qatar began to experience its first boom of consistent expansion and modernisation from oil revenues.
By the time of independence in 1971, the country’s banking and financial services were still minimal.
Until 1971 the government had relied on foreign banking institutions, while local financial services for Qataris had been concentrated in unregulated, privately owned and run exchange houses, which dealt in foreign currencies and precious metals.
Hussain Alfardan – the founding father
Hussain Alfardan, a member of an established Gulf pearling family, gained experience at one of the first foreign banks in the country – Standard Chartered Bank (or Eastern Bank Limited, as it was called at the time) – in the early 1950s, starting when he was only 18. He recalls:
‘[Standard Chartered Bank] was my life – it was my school, it was my university, it was everything, that bank, because we didn’t have schools in the past.
When I started I was limited in my financial experience, but when I left I was mature, because I knew the market, I knew what the market needed, and I knew business’
In 1952 he began to dream of establishing a local bank in Qatar, but first Alfardan opened his own wholesale import business. A success, the business expanded to sell gold, pearls and jewellery in 1954. By 1958, Alfardan’s strong relations with local merchants allowed him to pursue his own business interests full-time.
By 1965, Alfardan had succeeded in establishing a fully-fledged exchange house, remitting all currencies. The Alfardan Exchange became the most influential money exchange in the country. Qataris dealt almost exclusively in cash at the time, and Alfardan’s establishment provided many locals with a place to deposit their money.
Convinced that his newly independent nation required a private bank of its own to advance economic growth and encourage its trading community, Alfardan gathered together some of his most trusted friends and Doha’s respected businessmen to establish Commercial Bank. The founders were significant players in the local economy of that time, owning as they did some of the largest private businesses in Qatar. Despite the strong backing, the founders had to persevere to receive a licence for their proposal. According to Alfardan:
‘We had to fight a lot – me, my friends, my colleagues, the founders of the bank– everybody was fighting. But we prepared everything and worked together’
Establishment of Commercial Bank
Receiving approval in 1973, the Bank’s Articles of Association were drawn up in 1974. Commercial Bank finally opened for business in a small two-storey building off the old Arab Bank roundabout (now Souq Najada) on 10 April 1975.
Members of eight prominent families had invested their personal funds to found the bank; the 10 million riyals (USD 3 million) of start-up capital was no small sum in those days.
There had never been a privately owned bank in the country before, and it was unusual for a business to place itself in direct competition with the part-government-owned Qatar National Bank.
Sheikh Ali bin Jabor Al-Thani, acting as Commercial Bank’s Chairman of the Board, appointed the 10 original directors, including Abdul Ghani Abdul Ghani as Deputy Chairman, Hussain Alfardan as Managing Director, and Ahmed bin Khalifa Al-Thani, Nasser bin Faleh Al-Thani, Khalifa Abdullah Al-Attiyah, Jassim Mohammad Jabor Al-Mosallam, Jassem bin Mohamed Al-Jaidah, Omar Al-Mana and Salmeem Al-Sowaidi as members of the board.
The founders unanimously decided on the name ‘The Commercial Bank of Qatar’, a name which, as Alfardan recalls, ‘described perfectly the role we intended to play in the market: that of supporting and encouraging Qatar’s trading community’.
Tellingly, over 35 years later, three of the original directors are still connected with the board, thus providing virtually lifelong contributions to the institution. Relatives of the original members have even taken positions on the board in continuance of the founding fathers’ vital contributions.
With its newly obtained licence, the founding board members of Commercial Bank called on the advice of contacts around the world to establish the best management partner for the bank.
The support of Chase Manhattan
The American banking giant Chase Manhattan Bank was selected for a management-services contract. Alan Mitchell, an Englishman fluent in Bedouin Arabic and a loyal friend to Hussain Alfardan, had worked with the founding board members on the establishment of the bank and joined Chase Manhattan to serve as Commercial Bank’s first General Manager.
Chase Manhattan provided training and general managers, including the American Donald Hayek, who succeeded Mitchell. At the time, Chase Manhattan, under the leadership of David Rockefeller, was pursuing an aggressive campaign of globalisation.
Rockefeller travelled to Qatar in his private jet, visiting both the Emir and the Bank itself, even financing a USD 350 million deal for four industrial projects, a coup later dubbed the ‘1977 Deal of the Year’ by Institutional Investor.
Developing a close working relationship that was cemented by means of fishing trips and private dinners, Alfardan recalled Rockefeller’s influence in a 2008 interview:
‘He taught me that one must be patient and must fight for what he wants and believes in. He also taught me that one must be strong and determined.’
Initially, the Bank focused on Wholesale Banking and Corporate Banking services, targeting local merchants. Sheikh Ali bin Jabor, the well-liked and respected founding Chairman who was also a keen poet, and Hussain Alfardan would visit the Bank daily, even vetting potential clients.
Today, Commercial Bank, still under Alfardan’s direction (he is fondly referred to as the ‘Godfather of the Bank’ by members of the board), occupies an ultra-modern 22-storey office plaza in Doha, a far cry from its humble beginnings.
Abed Aziz, the first staff member to be hired by the Bank, sheds valuable light on the astonishing rate of the Bank’s growth when he says, ‘I started with him [Hussain Alfardan] when he only had one shop. From 1 January 1975 for four months we stayed in his offices.
’ At the time, the Bank had only one other employee.
The early days – A bank unlike any other
Mohammad Khalil Mohd Jamil recalls wandering on to the headquarters construction site this way:
‘I met a Pakistani guy who was an assistant and told him we wanted to join the new bank and immediately he called the Operation Manager and after a few minutes, we took an appointment and within half an hour I was in the Operation Manager’s office for an interview. Immediately they sent me upstairs and I started that same day.’
Within three months, four of Jamil’s colleagues from a rival bank had joined him. One year later, the Bank had grown to a staff of nearly 40 in the centre of Doha, and Qatar’s first female teller was hired.
The Bank was the ‘best place to be working’, recalls staff member Rajan Koshy:
‘Male staff were wearing three-piece suits and quite a few ladies were also seen working together with male staff. It was an unusual sight unlike in other offices.’
Though Commercial Bank had established its management and built up its staff and its premises in addition to being in profit in its first year, ‘… it was a fight,’ recounts current Board Member Sheikh Ahmed bin Nasser bin Faleh Al-Thani (his father served as a Founding Board Member).
‘It was a lot of hardship and a lot of troubles. In those days it was the responsibility of the board members to carry the Bank, to push,’ he adds. ‘For a long time we suffered because we didn’t have good business,’ explains Hussain Alfardan, ‘but I was patient, squeezing the expenses, and trying to be strong in the market and trying to get the best clients and management.’
The Bank and its board laboured on building strong personal relationships with customers.
Alfardan visited the souq regularly for clients, and the Bank focused on its staff and customer services, offering clients a private, informal setting in which to conduct business, visit with friends or share news of good fortune. ‘All the big names, that are glamorous now, used to come and sit in the Bank,
’ recalls Huda Hobbi, a long-serving employee.
Independence and the expansion
From the beginning of Commercial Bank’s history, there was a prescient emphasis on ensuring that all the necessary systems for coping with expansion were in place.
Profitable in its very first year, the Bank’s steady growth was assured by the dedication and hard work of the board, and by 1982 Chase Manhattan’s management-services role had come to an end.
Though the majority of Chase Manhattan employees chose to stay with Commercial Bank, Rockefeller jokingly agreed to treat it ‘as one of our branches without disturbing you with our running it’, recalls Alfardan.
Commercial Bank and Chase maintain close ties to this day.
Commercial Bank, now fully independent, was able to build on shareholder funds and reserves and fully invest in its own expansion. The year 1980 saw the opening of the Bank’s first full-service branch, at Souk Al Ahmed.
Despite a state revenue decrease of 40% in the mid-’80s due to declining oil prices, Commercial Bank continued to expand under the direction of its British general manager Finlay Moodie, with a second branch, in Al-Wakrah, opening three years later. Commercial Bank was the first bank to establish a branch in this city south of Doha, and the Al-Wakrah office was in profit within a year.
Groundbreaking services for women
The most socially significant branch expansion occurred in 1989 with the opening of the first Ladies’ Branch off Salwa Road. The building, a secure, self-contained edifice in its own grounds, was designed solely for use by women and was staffed entirely by women.
The full-service Ladies’ Branch was a liberal idea for its time, granting Qatari women unprecedented financial freedom. The branch even introduced a lending scheme against gold for women without access to other assets. As Huda Hobbi remembers:
‘I was insisting on looking professional. Yes, we were nice, yes we had pink marble with Persian carpets and we offered tea and coffee, BUT we were bankers
A new office in Grand Hamad Avenue
The greatest physical expansion came at the end of 1987 with the introduction of a new head office in the respected banking area on Grand Hamad Avenue.
With a staff of nearly 100, Commercial Bank had outgrown its previous headquarters, relying on the use of nearby stores at the Arab Bank roundabout building.
The new building was state of the art for its time, designed for maximum efficiency and playing on modern notions of client and staff facilities. Initially, the Bank only occupied the lower three floors, with leased offices and staff apartments occupying the remaining levels, thus allowing the smell of home cooking to waft regularly through the corridors.
The Bank’s growth and multiple branches meant increasing complexity in accounting and cash operations. Huda Hobbi recalls:
‘We didn’t have calculators or counting machines. Everything was done manually and you had to go through the rolls sometimes five or six times to find the difference. My dad used to wait for me outside the Bank until 11 p.m. at night!
‘Everything was manually booked through spreadsheets and ledger cards,’ adds Aref Tayyeb Madyar, another longstanding employee, who emphasises that ‘… it was very hard to do the job at that time’.
In November 1988 a computer system that allowed for full real-time and online connections between branches was installed. Computerisation granted Commercial Bank the freedom to expand at an even greater pace.
The late 1980s and 1990s
New leadership and direction
From the late 1980s through the 1990s, Commercial Bank entered a period of innovation as a leading bank in Qatar. Timothy P. Nunan became General Manager in 1988, staying with the Bank for over 12 years. Described as strong, decisive and intelligent as well as kind and charismatic, Nunan had a clear vision and a leadership style that was quickly reflected in the improved performance of the Bank, which doubled its profit in his first year.
Nunan was also responsible, in 1989, for hiring Andrew Stevens, a promising new employee, initially as Deputy Manager of Operations and Administration. Alfardan recalls:
‘When I met [Stevens], I knew I would stay with him for ever.’
Together, they directed the company towards the retail-banking sector.
The launch of loans and Credit Cards
Commercial Bank became the first bank to offer small Personal Loans and Vehicle Loans to customers in 1988, dramatically changing the relationship Qataris had with lending and banking institutions. Qataris had traditionally paid in cash, portioning off payments over years, a practice that limited economic development generally.
Commercial Bank also introduced credit and debit cards, acquiring franchises (for example, Diners Club in 1991, and eventually the Diners franchises in Egypt, Bahrain, Yemen, Sudan, Syria and Iran).
‘Credit Cards were a must for travel to Europe and the US,’
remembers Rajan Koshy.
In 1990 the first ATMs, which had become global 15 years previously, were ordered by Commercial Bank, followed in 1992 by the country’s first electronic-funds-transfer-at-point-of-sale systems.
Commercial Bank, as the initiator of these schemes, dominated the Qatari market and still serves as one of the largest credit-card POS-terminal network providers and issuers of Diners Club, Visa and MasterCard credit cards.
Within five years, the Bank had witnessed a fourfold increase in the number of current/chequing accounts on its books and an oversubscription factor of six to their rights issue and public offering in 1996.
The opening of an investment services division in special premises at the head office allowed the Bank also to position itself as a leader in investments, selling mutual funds in 1993, creating a bank investment fund and full-service investment options in 1995, and publishing the first stock-exchange index in Qatar (The Commercial Bank of Qatari Shares Index) in 1994. The latter subsequently became the internationally accepted yardstick for the Qatari stockmarket.
The launch of Qatar Stock Exchange
As a founder of the Qatar Stock Exchange, the Bank was consulted for its expertise, licensing the first brokers on the Doha Securities Market (DSM) in 1997. By the end of the 1990s, Commercial Bank had grown to over 450 staff with 14 branches across Qatar. Within 10 years, the Bank’s retail banking had grown from a small base to accounting for 50% of revenues.
Changes were evident in Qatar as well. The 1990s had begun with the invasion of Kuwait and the fear of a larger-scale war. Longstanding employee Narayan Suresh Babu recalls:
‘There was a bit of uncertainty and everybody was praying for the end of it,’. ‘One day I saw a Kuwaiti citizen standing in front of the teller at Grand Hamad Branch. He had a bunch of Kuwaiti dinar cash to exchange for Qatari riyals.’
Tim Nunan brought the staff together to brief them on the potential conflict.
‘I remember at the time of the Gulf War, he was very worried about us, gathered all of us in the boardroom and had a few army people come in, and explained to us what to do,’ explains Huda Hobbi.
Luckily the invasion was shortlived. For Sheikh Hamad bin Khalifa Al-Thani, who came to power in 1995, it meant the further development of Qatar’s oil and gas resources paired with increased diplomatic efforts to ensure greater security for his small country.
The year 2000 and beyond
In 2001, the board appointed Andrew Stevens Group CEO on the recommendation of his mentor Tim Nunan, who died before fully retiring from his role.
Hussain Alfardan described Andy Stevens as having ‘vision and confidence’. ‘[He] made me relax. I used to be worried about the Bank ... The Bank is Andy’s home, his office, his life,’ Alfardan adds.
With a clear vision, a focus on detail and real commitment to the future success of the Bank, Stevens and the board refocused the organisation’s efforts in the area of business and Corporate Banking. The continuity of ownership and management (Stevens being one of the longest serving CEOs in the business) and the board’s ambitious vision have resulted in Commercial Bank’s current ranking as the largest private bank in Qatar, boasting a staff of 1100 and an extensive network of full-service branches.
In 2012, Commercial Bank posted the largest profits in its history. Commercial Bank’s double-digit growth would be described as astonishing by any Western bank’s standards.
Originally keeping cash amounts of no more than 2 or 3 million riyals in two small safes, the Bank now handles up to 200 million riyals in cash in 10 large safes and serves as the largest depositor to Qatar’s Central Bank.
A new headquarters – Commercial Bank Plaza
The humble two-storey rented building that served as the Bank’s headquarters in the 1970s has grown into Commercial Bank Plaza, the first building in the Middle East to be constructed with a full, transparent curtain glass system, as well as the first to employ an ‘active façade’ to track the sun’s path throughout the day. It also boasts some of the most efficient use of floorspace of any high-rise building in the region.
In addition to introducing mobile banking services and online savings accounts, the Bank currently operates the only Banknote Processing System (BPS) in Qatar and was the first bank to have a central vault.
Commercial Bank was also the first Qatari bank to list its Global Depository Receipts (GDRs) and bonds on the London Stock Exchange, the first Qatari bank to issue Swiss-franc public bonds in Switzerland, and the first Qatari bank to be awarded the coveted PCI Card Security Certificate.
If Commercial Bank’s economic growth and cultural vision are impressive, it has equally been influenced by the opportunities presented by Qatar’s own quick development and transformation.
Commercial Bank opened its twelfth branch, at Ras Laffan, in 1998. With 435 staff, the bank had total assets of 4 billion riyals, and the population of Qatar was 561,000 with a GDP of 37 billion riyals.
Today Commercial Bank has an extensive network of full-service branches with over 1100 staff, while the population has grown to 1.7 million. Commercial Bank’s total assets have grown similarly – sixteenfold in fact – to 80 billion riyals, with profits to 2 billion riyals – growth of over 21 times.
Meanwhile Qatar’s own current GDP has grown to 712 billion riyals. Thus Qatar, a tiny country of 11,500 square kilometres (smaller than the American state of Connecticut) has managed to achieve in decades what it has taken other countries centuries to do.
Qatar has become one of the Gulf region’s wealthiest states, with the highest GDP in the world, primarily due to its natural gas resources, which account for more than 50% of GDP and roughly 85% of export earnings. In 2012, Qataris were the world’s richest people in GDP-per-capita terms. The economy produced USD 106,284 per person for the total population, more than twice as much as the US and over 10 times the level seen in China.
By encouraging private individuals as well as supporting business enterprises in the process of being built up from the humblest of beginnings, Commercial Bank has played a critical role in helping to shape Qatar’s economic destiny by promoting the leadership’s expansive vision.
Helping individuals who live and work in Qatar with their financial dealings as well as supporting the growing infrastructure of the country itself, Commercial Bank has also been aggressive on the corporate side, lending to multi-national companies and government entities alike.
The Bank has continually invested in the community and, in so doing, has itself benefited from a period of stunning growth. The Qatari banking environment may be extremely competitive, but the country has some of the healthiest banks in the world, as well as the fastest-expanding presence abroad, all thanks to strict government banking regulations.
In 2005 Commercial Bank agreed a strategic alliance with the National Bank of Oman (NBO) and, two years later, with United Arab Bank (UAB) in the United Arab Emirates. NBO is the second-largest bank in Oman, with total assetsof 2.5 billion Omani rials, and has 66 branches in Oman, three in Egypt and one in Abu Dhabi.
UAB in Sharjah, in the Emirates, holds total assets of 15 billion UAE dirhams and operates 15 branches across the country. Thus, 30 years after Hussain Alfardan signed a management-services contract with Chase Manhattan Bank, Commercial Bank has come full circle in helping regional banks develop and expand.
Profitable every year since its incorporation, Commercial Bank’s performance has resulted in prized credit ratings from Fitch (A), Moody’s (A1) and Standard & Poor’s (A-), including a laudable Standard & Poor’s rating in the midst of the 2008 international banking crisis. Its excellence, reliability and ambition earned it the J. P. Morgan Quality Recognition Award for operational excellence for seven consecutive years, as well as the Citi Performance Excellence Award in 2011.
That same year, Commercial Bank signed a landmark agreement with Qatar Development Bank to finance small- and medium-sized enterprises in support of the Qatar 2030 National Vision initiated by H. H. Sheikh Hamad bin Khalifa Al-Thani in 2008.
This ambitious plan was conceived in order to balance the interests of the Qataris of today and tomorrow, thus building a bridge between the present and the future while striving to maintain the best of traditional values.
Commitment to Qatar’s future
The former Emir’s blueprint, spearheaded by his wife Sheikha Moza bint Nasser, is leading to the construction of a vast complex of new schools and universities (in an area of the capital known as Education City), a Science City with some of the world’s most advanced research facilities, cutting-edge (even paperless) hospital complexes, and a post-production centre to service the international film industry.
As part of a wide-ranging programme of community support, Commercial Bank also aids the efforts of notable charitable organisations whose shared goal is to contribute significantly to the improvement of the country’s social infrastructure.
The Bank’s specific contribution involves offering both funds and services through the Qatar Society for Rehabilitation of Special Needs, Qatar National Cancer Society, Qatar Foundation for the Care of Orphans ‘Dhreima’, Qatar Foundation for Elderly People and Shafallah Center (for children with special needs).
The increase in revenues that followed independence and development under the influence of the former Emir’s vision has brought with it booming prosperity, increased immigration, and educational and other forms of advancement. It has also inspired a virtually unequalled national spirit of ambition, a belief that anything – indeed everything – is possible.
A strong sense of national and religious identity continues to characterise the Qatari population at large in the face of an influx of guest workers and a growing tourist industry. The latter has targeted high end visitors and, as of quite recently, foreign property owners and investors participating in such projects as The Pearl-Qatar, once again conceived by Hussain Alfardan and his associates.
However, unlike Dubai, Qatar does not rely on mass-market tourism. Instead it is working to become known as a cultural and conference centre for the Gulf region. Hence its phenomenal push in the fields of art and culture, including the building of such iconic landmarks as I.M. Pei’s Museum of Islamic Art in Doha and Mathaf, the Gulf’s only Arab museum of modern art.
As part of the initiative to invest in the country’s creative capital, Katara Cultural Village signed an exclusive strategic partnership with Commercial Bank, offering bank customers priority access to Katara’s events, with the funds subsequently reinvested in the growth of Katara as the country’s cultural hub.
Situated on the eastern coast of Doha, Katara is an integrated landmark possessing the character of an historic and inspirational breeding ground for arts and culture, and is thus integral to the enhancement of national identity. Enrichment of national identity also serves as the inspiration for increasing Doha’s profile as a regional sporting centre.
Conscious of similar national efforts, Commercial Bank signed a memorandum of understanding with Al-Sadd Sports Club in support of the club’s disability legacy programme. This initiative is aimed at developing a safe, comfortable environment to cater to the needs of disabled fans.
The Bank additionally supports such leading sporting events and organisations as the Commercial Bank Masters, the MotoGP Commercial Bank Grand Prix of Qatar and, previously, tennis opens, the Qatar Handball Association and the Qatar Basketball Federation. The Qatar Cricket Association even benefited from the donation of a coach to transport the teams to and from their homes to matches and practice sessions.
Commercial Bank, like most front line Qatari institutions, firmly supported the country’s successful bid to host the 2022 FIFA World Cup. This gargantuan project involving multiple stadia has resulted in an even more dynamically expanding construction sector for the multi-billion-dollar makeover that will give the city a new metro system, museums (including one designed by Jean Nouvel), seaport and roads.
It is within this larger context of possibility and drive to improve and innovate that Commercial Bank is continuing to build its remarkable reputation and adapting its many contributions to Qatar’s undeniably bright future.
Prioritising service and staff
As a business that distinguishes itself based on customer service, trust and quality of staff, Commercial Bank is preserving Qatari traditional values while expanding alongside the country’s ambitious vision.
Gulf Business recently identified Commercial Bank as one of the top 10 companies to work for in Qatar.
From its beginning in 1975 with staff picnics organised by the founding Chairman and training sessions by Chase Manhattan Bank personnel, today Commercial Bank staff receive full training both at home and abroad, including initiatives such as the Future Leaders Programme, Graduate Development Programme, Accelerated Leadership Programme and Career Management Programme.
Designed to enable candidates to excel in their fields while training with some of the world’s leading universities and business schools (including Judge Business School, Cambridge; London Business School; HEC, Paris; Center for Creative Leadership, Brussels; and INSEAD, Paris), the Bank has been able to accelerate the career progression of its highest-potential leaders and build on the strong foundation of its staff.
With what many describe as unparalleled humanity and compassion, Commercial Bank treats its staff, as Hussain Alfardan explains, ‘as family
’. Andy Stevens expands on this theme: ‘Developing Qatar’s human capital through education or social care is a central component of our Bank’s values, as we strongly believe this is an integral part of our commitment towards the community.
Having come so far in such a short period of time relative to the overall development of global banking, Commercial Bank continues to adhere to the principles of its founding members, including commitment to its clients and to Qatar’s lofty ambitions, coupled with a prudent regard for risk.
The Bank is also continuing to spearhead development in both the local and regional banking sectors. With its sights now firmly set to expand on the global banking stage, Commercial Bank’s ambitions are only bounded by its bold vision, prudent leadership and the cumulative expertise born of the experience of the past 40 years. It has succeeded in living its ambitions to the full, and the best is yet to come.