Gulf banks refusing to extend deposits with Qatari lenders
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