Slowing outflows let Qatar wind down bank support operation in Oct

DUBAI: Slowing withdrawals of deposits from Qatari banks permitted Qatar’s government to stop pumping money into the banks last month to shield them from sanctions imposed by other Arab countries, central bank data showed.

Banks and investors from Saudi Arabia, the United Arab Emirates, Bahrain and Egypt began pulling deposits and other funds out of Qatar in June, when those four states cut diplomatic and trade ties with Doha.

The deposit outflow initially put the balance sheets of some Qatari banks under pressure, and the government responded by injecting billions of dollars of its own money into accounts at the banks.

Much of the money came from the country’s sovereign wealth fund, the Qatar Investment Authority (QIA).

But the outflows are now slowing, as the four states run out of money left to withdraw.

That is reducing the need for the government to aid the banks.

In October, foreign customers’ deposits at banks in Qatar – the vast majority in the form of foreigncurrency deposits – fell by only 5.1 billion riyals ( US$ 1.4 billion) from the previous month, to 137.7 billion riyals, the data showed.

The decline was slower than falls of 6.2 billion riyals in September, 8.2 billion in August, 13.4 billion in July and 14.0 billion in June.

Meanwhile, the Qatari public sector’s deposits with local banks fell slightly in October after soaring during the initial months of the sanctions, indicating the government was no longer pumping fresh money into the system as a whole.

The deposits dropped by 4.2 billion riyals to 298.4 billion riyals last month, after increasing by 7.2 billion riyals in September and rising by more than three times that amount in each of the previous three months. — Reuters