Global banks said to shift Qatar business from Dubai hub
Dubai, UAE - Some international banks are serving Qatar from London and New York instead of Dubai’s financial centre as a regional dispute makes it harder to do business with clients in the gas-rich Gulf state, according to people familiar with the matter.
Lenders that handled clients such as the Qatar Investment Authority and wealthy family offices out of the Dubai International Financial Centre (DIFC ) are shifting coverage to other global financial hubs to avoid damaging relations with the United Arab Emirates and Saudi Arabia, said the people, asking not to be identified.
Saudi Arabia, the UAE, Bahrain and Egypt severed diplomatic and transport links with Qatar in June, accusing it of supporting extremist groups. Qatar denies the charges. As part of the restrictions, Emirates, Etihad Airways PJSC and FlyDubai suspended flights to and from Qatar, meaning that Dubaibased bankers have to fly via Oman or Kuwait, adding hours to a flight that used to take less than 60 minutes.
Dubai became the Gulf region’s main banking hub after opening the DIFC in 2004 to attract international banks, asset managers and insurers with promises of zero taxes for 50 years. Many bankers commute daily or weekly between the emirate and neighbouring Gulf states such as Qatar and Saudi Arabia to do business with local clients.
A number of Qatari clients are also saying they would prefer to work with bankers outside of the Gulf region rather than with bankers based in the DIFC, the people said.
Regional banking operations are also being impacted amid the crisis. Some lenders in the UAE, Saudi Arabia and Bahrain are said to have cut their exposure to Qatar amid concern of a widening of the blockade, while Qatari lenders are boosting interest rates on dollar deposits to shore up liquidity. Qatar also has a financial hub of its own that was started by the Qatari government to foster investment in the country’s financial system. The Qatar Financial Centre is sticking to its target to attract 1,000 firms by 2022 even amid the standoff, chief executive officer Yousuf al Jaida said in June.