Gulf banks said to be re­fus­ing to ex­tend Qatar de­posits

Muscat Daily - - BUSINESS -

Dubai, UAE - 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, peo­ple with knowl­edge of the mat­ter said.

Some banks based in Saudi Ara­bia, the United Arab Emi­rates, Bahrain and Egypt, aren’t ex­tend­ing de­posits with Qatari lenders when they ma­ture, said the peo­ple, ask­ing not to be iden­ti­fied. Th­ese banks are con­cerned that they could face reper­cus­sions from their gov­ern­ments for con­tin­u­ing busi­ness re­la­tions with Qatar af­ter they cut ties with the coun­try, the peo­ple said.

Lenders are also strug­gling to repa­tri­ate funds be­cause their coun­ter­parts in Qatar aren’t swap­ping riyals into dol­lars, two of the peo­ple said. Banks can ei­ther roll over their riyal de­posits or con­vert them into 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 their 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 US$47bn from a month ear­lier, ac­cord­ing to cen­tral bank data. Over­all de­posits climbed 1.1 per cent helped by a jump in do­mes­tic funds.

The slide in non-res­i­dent hold­ings, which ac­count for 22 per cent of over­all de­posits, comes even af­ter lo­cal lenders raised in­ter­est rates to try and at­tract for­eign­ers. Qatar’s sov­er­eign wealth fund, the Qatar In­vest­ment Au­thor­ity, in­jected de­posits into lo­cal banks to shore up liq­uid­ity af­ter the cri­sis started, peo­ple fa­mil­iar with the de­vel­op­ment said in June.

The Qatar three-month in­ter­bank of­fered rate, a bench­mark used to price some loans, climbed to 2.49 per cent on Au­gust 3, while a sim­i­lar rate in Saudi Ara­bia was at 1.8 per cent and 1.53 per cent in the UAE, ac­cord­ing to data com­piled by Bloomberg.

The rift with the Saudi-led bloc has spurred a unit of Doha Bank QSC, Qatar’s fifth-big­gest lender, to con­sider sell­ing some of its as­sets in the UAE to lo­cal banks, Reuters re­ported, cit­ing two peo­ple fa­mil­iar with the mat­ter.

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