BANK­ING FORE­CAST

Qatar Today - - BUSINESS -

The Min­istry of De­vel­op­ment Plan­ning and Sta­tis­tics re­leased a longterm report on the Qatari econ­omy which high­lighted chal­lenges and op­por­tu­ni­ties for the bank­ing in­dus­try.

Liq­uid­ity in the Qatari bank­ing sys­tem has tight­ened and money mar­ket rates have risen be­cause of re­duced in­flows of gas and oil money, the min­istry said, adding that the cen­tral bank might take sev­eral steps to re­duce pres­sure on liq­uid­ity. It could cut of­fi­cial in­ter­est rates, con­tinue to sus­pend do­mes­tic Trea­sury bond is­suance while re­sum­ing its sus­pen­sion of Trea­sury bill is­sues, or adopt un­con­ven­tional mea­sures used by cen­tral banks in other coun­tries such as di­rect pur­chases of com­mer­cial bonds and ex­tra­or­di­nary loans to, or eq­uity in­jec­tions in, in­di­vid­ual banks, said the min­istry with­out spec­i­fy­ing which steps were likely to be cho­sen.

In early 2014, the cen­tral bank an­nounced a new loan-to-de­posit re­quire­ment for banks of 100% by the end of 2017. The de­posit side of the ra­tio in­cludes only cus­tomer de­posits and not long-term whole­sale funds, which have re­cently been the pri­mary source of fund­ing for banks. The banks are still ne­go­ti­at­ing with reg­u­la­tors to change the loan-to-de­posit for­mula to in­clude longterm whole­sale funds, and the dead­line for com­pli­ance may be post­poned un­til the end of 2018 be­cause of the liq­uid­ity is­sues at Qatari banks, the min­istry said.

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