Some Egyptian banks halt dealings with Qatari banks
Lenders in Saudi, UAE receive no regulatory guidelines on Qatar
CAIRO, June 5: Some Egyptian banks halted dealings with Qatari banks on Monday after Cairo’s announcement that it had cut diplomatic relations with Qatar for supporting terrorism, though Egypt’s central bank urged banks to continue dealing in Qatari riyals.
The decision to cut ties, announced in Monday’s early hours, was coordinated with similar moves by Saudi Arabia, the United Arab Emirates and Bahrain. Egypt did not say if the measure included a suspension of trade with Qatar, and the Trade Ministry did not immediately respond to questions on this.
Four bankers told Reuters that they had halted transactions with Qatari banks based on internal orders from management at their banks, though they had not frozen the opening of letters of credit required for imports.
Some banks have stopped accepting Qatari currency while others are halting some treasury transactions, the bankers said.
Bankers at three other lenders said they had not received any orders and that it was business as usual so far.
The central bank said later in a statement that it had not issued instructions to halt transactions being made in Qatari riyals and urged banks to accept the currency.
“The Qatari riyal is one of the official currencies which is used in transactions without any restrictions on its circulation or transfer to Egyptian pounds or to any other foreign currency,” the statement said.
There had been no official communication to banks from the Central Bank of Egypt on the split, the bankers said.
As well as severing relations, Egypt announced the closure of its air space and seaports for all Qatari transportation and said this was to protect national security.
The sentiment against Qatar was shared by Egyptian business tycoon Naguib Sawiris, who called on Egyptian businessmen to withdraw their investments from Qatar and halt business dealings with the Gulf state, his spokesperson said on Monday.
Meanwhile, banks in Saudi Arabia and the United Arab Emirates have not received any regulatory guidelines about their dealings with Qatari lenders despite the rift in diplomatic ties, sources familiar with the matter said.
The UAE, Saudi Arabia, Egypt and Bahrain cut diplomatic and transport links with Qatar on Monday, accusing it of supporting terrorism.
Bankers Reuters spoke to in Saudi Arabia and the UAE said they were waiting for guidance from their respective regulators before taking any action on Qatari business. In contrast, some Egyptian lenders halted business with their Qatari counterparts on Monday.
The UAE central bank did not immediately respond to a Reuters request for comment, while a spokesman for the Saudi central bank said it had no statement on the matter.
It was not clear what financial measures could be taken against Qatar, although some lenders in Egypt stopped accepting Qatari currency while others halted some treasury transactions, bankers told Reuters.
One of the sources in the UAE, speaking anonymously under briefing rules, said the UAE central bank was still weighing the financial implications of the diplomatic rift.
Another banker said the Saudi Arabian banking system had limited exposure to Qatar and that any curbs on dealings with Qatari banks would not have huge ramifications.
The impact of the rift could be more significant for Qatar National Bank (QNB), the Middle East’s largest bank by assets.
Last month it opened a branch in Riyadh and has been planning to apply for an investment banking licence. It also has a presence in Egypt, where it bought Societe Generale’s Egyptian business for about $2 billion in 2013, and holds a 40 percent stake in UAE-based Commercial Bank International.
QNB’s branch in Riyadh was quiet on Monday afternoon and the branch manager said business was carrying on usual.
A source familiar with the matter said QNB’s business in Saudi Arabia and Egypt was unaffected.