Gulf banks re­fus­ing to ex­tend de­posits with Qatari lenders

New Straits Times - - Business -

DOHA: For­eign de­posits at Qatar’s banks may fall fur­ther af­ter drop­ping the most in al­most two years in June as some Gulf lenders refuse to roll over hold­ings, said peo­ple with knowl­edge of the mat­ter.

Some banks based in Saudi Ara­bia, the United Arab Emi­rates, Bahrain and Egypt weren’t ex­tend­ing de­posits with Qatari lenders when they ma­tured, said the peo­ple.

These banks were con­cerned that they could face reper­cus­sions from their gov­ern­ments for con­tin­u­ing busi­ness re­la­tions with Qatar af­ter they cut ties with the coun­try, said the peo­ple.

Lenders are strug­gling to repa­tri­ate funds be­cause their coun­ter­parts in Qatar aren’t swap­ping riyals into US dol­lars.

Banks could ei­ther roll over their riyal de­posits or con­vert them into US dol­lars in the off­shore mar­ket where they get a worse ex­change rate than Qatar’s pegged of­fi­cial rate, they said.

Gulf-based banks placed de­posits with the 18 lenders in the world’s big­gest liq­ue­fied nat­u­ral gas ex­port­ing na­tion ear­lier this year as its lo­cal in­ter-bank rate reached the high­est in the re­gion.

Non-res­i­dent de­posits in Qatari banks in June posted big­gest de­cline since Novem­ber 2015.

Four Gulf states sev­ered diplo­matic and trans­port links with Qatar that month, ac­cus­ing it of sup­port­ing ex­trem­ist groups. Qatar de­nies the charges.

For­eign de­posits dropped 7.6 per cent to 170.6 bil­lion riyals (RM201 bil­lion) from a month ear­lier, ac­cord­ing to cen­tral bank data. Over­all de­posits climbed 1.1 per cent, helped by a jump in do­mes­tic funds. Bloomberg

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