Qatar govt pre­pared to cover banks if de­posits ‘with­drawn’

$18 bln de­posits from block­ade na­tions

Arab Times - - LOCAL/GULF -

DOHA, June 19, (RTRS): Qatar’s govern­ment is pre­pared to sup­port lo­cal banks if foreign in­sti­tu­tions with­draw de­posits from them be­cause of an eco­nomic boy­cott against Doha, the chief ex­ec­u­tive of the Qatar Fi­nan­cial Cen­tre (QFC) said on Mon­day.

Yousef al-Jaida said in­sti­tu­tions from Saudi Ara­bia, the United Arab Emi­rates and Bahrain, which broke off diplo­matic and trans­port ties with Qatar on June 5, had about $18 bil­lion of de­posits in Qatari banks that would ma­ture in two months.

If nec­es­sary, the Qatari govern­ment will step in to cover those funds if they are with­drawn, and other banks in the QFC are still pro­vid­ing short-term US dol­lar de­posits to Qatar’s bank­ing sec­tor, he told re­porters.

“Whether the block­ade coun­tries make a de­ci­sion on re­tract­ing those de­posits is yet to be seen. Those ma­ture in a cou­ple of months, so there’s no im­pact as of yet. But this is a mea­sure and a point that we are pay­ing close at­ten­tion to.

“We’ve been in a worse cri­sis in 2008, a fi­nan­cial cri­sis not a po­lit­i­cal cri­sis, and the govern­ment was able to step in and buy out the de­fault port­fo­lios of loans and real es­tate at that time. If a need arises, the govern­ment can easily step in and en­force sim­i­lar mea­sures.”

The QFC li­censes foreign com­pa­nies to ex­empt them from the Gulf state’s lo­cal own­er­ship laws. The cen­tre has its own le­gal, reg­u­la­tory, tax and busi­ness in­fra­struc­ture, al­low­ing for 100 per­cent foreign own­er­ship and full repa­tri­a­tion of prof­its.

Jaida said the QFC did not plan to take any ac­tion against com­pa­nies from Saudi Ara­bia, the UAE or Bahrain in re­sponse to the sanc­tions by their govern­ments, which ac­cuse Doha of back­ing ter­ror­ism.

“We do not in­tend to take any mea­sures on any busi­nesses in Qatar from the block­ade coun­tries. We have Saudi and Bahraini banks in the QFC,” he said.

“It re­mains busi­ness as usual, and we in­tend to keep it that way. There are five com­pa­nies at the QFC from Saudi and Bahrain.”

How­ever, Jaida said coun­tries im­pos­ing the sanc­tions had re­stricted some of their com­pa­nies from do­ing busi­ness in Qatar, which was af­fect­ing about $2 bil­lion of these com­pa­nies’ con­tracts in ar­eas such as con­struc­tion, pro­fes­sional ser­vices and ex­port of ma­te­ri­als. He did not give de­tails.

The UAE cen­tral bank has asked banks to ap­ply “en­hanced cus­tomer due dili­gence” when deal­ing with six Qatari banks, mak­ing the UAE in­sti­tu­tions re­luc­tant to do fresh deals. Guid­ance from the Saudi and Bahraini cen­tral banks has also de­terred new busi­ness with Qatar, bankers told Reuters.

Jaida said the QFC had can­celled plans to hold a road­show for po­ten­tial cus­tomers in Dubai this year be­cause of the diplo­matic rift.

But he said there could be longterm ben­e­fits for the QFC and Qatar, as com­pa­nies which had pre­vi­ously served Qatar from bases in neigh­bour­ing coun­tries now had no op­tion but to es­tab­lish of­fices in Doha.

“Law firms, con­sul­tan­cies, pro­fes­sional ser­vice com­pa­nies were told not to ac­cess Qatar for no other rea­son than govern­ment de­ci­sions. We in­tend to lever­age and take full ad­van­tage of this op­por­tu­nity,” Jaida said.

Qatari com­pa­nies with op­er­a­tions in the Dubai In­ter­na­tional Fi­nan­cial Cen­tre are now look­ing to pull them back to Qatar, he said, with­out giv­ing de­tails.

The Qatar Ex­change has been plan­ning to in­tro­duce ex­change-traded funds as part of a drive to de­velop the stock mar­ket. Jaida said this plan would not change de­spite the mar­ket’s 8.6 per­cent tum­ble since the sanc­tions were in­tro­duced.

“Com­ing to a prod­uct like an ETF, there might be an im­pact in terms of rais­ing cap­i­tal for that par­tic­u­lar project. We in­tend to step in and launch that project re­gard­less of whether there is cap­i­tal or not,” he said, adding that the funds would be launched at the end of Au­gust or the start of Septem­ber.

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