Qatar banks face liquidity pinch
dubai — Qatari banks may need more cash injections from the state and new sources of funding from outside the Gulf region because of the risk of more withdrawals by banks and investors from the Saudi-led countries that are locked in a dispute with Qatar.
Banks have been feeling the fallout of the feud with Saudi Arabia, the UAE, Bahrain and Egypt, which cut diplomatic and transport ties with Qatar on June 5 and imposed economic sanctions. They accuse Qatar of financing militant groups and allying with Iran.
The move prompted banks from the four Arab states to stem new business with Qatar and several Qatar banks have seen an outflow of deposits.
“The immediate challenge that banks face is a liquidity challenge,” Mohamed Damak, a senior director at Standard & Poor’s, told Reuters. “If sanctions last for a longer period of time, investors’ nervousness might be on the rise and banks can experience significant outflows of external funds.”
Fitch Ratings estimates that the majority of deposits in Qatar from other GCC countries are Saudi and UAE’s deposits, and that they are being withdrawn as they mature, said Redmond Ramsdale, senior director in Fitch’s banks’ team.
“Asian depositors so far appear to have rolled over, albeit at a slightly higher price,” he said.
Almost $6 billion left Qatar over the last month, Qatar central bank governor Sheikh Abdullah bin Saud Al Thani said on July 10.
Qatar banking deposits were QR762.2 billion at the end of May, according to data from the central bank.
Qatar Islamic Bank, Masraf Al Rayan and Al Khalij Commercial Bank saw a total outflow of QR10.4 billion between the first and second quarters. —