Qatari banks looking for a solution to their crisis by raising the ownership of foreigners
Attempts to merge and resort to “unsecured” loans
Tuesday, 25 Jumada II 1439 e – March 13, 2018 Issue number 
London: Middle East
Qatar National Bank (QNB), the country’s largest bank, announced yesterday it plans to double its foreign ownership stake to 49 per cent in a move apparently aimed at finding new sources of financing amid the banking sector’s suffering. Qatar has been in successive crises since the boycott of four Arab countries, namely Saudi Arabia, the UAE, Bahrain and Egypt, to Doha. The bank is trying to get the shareholders’ approval of the Extraordinary General Assembly to raise the ceiling on foreign ownership from a planned 25 percent to 49 percent, the bank said in a statement yesterday, without giving a date for the move. Since the outbreak of the crisis with the Arab Quartet, the Qatari economy in general has been hit by a big jump, but the banking sector in particular has experienced a major escape of deposits and investments. The government has taken a number of measures to save it from liquidity problems, including injecting about $ 43 billion to support banks According to Standard & Poor’s estimates. Fitch Ratings said in a previous report that the withdrawal of deposits from banks in Qatar will likely lead to increased competition between Qatar banks on deposits, raising the cost of financing and pressure on margins. Last week, media sources reported that Qatar National Bank (QNB) ended a three-year “unsecured” three-year bank loan of $ 3.5 billion by nine foreign banks. QNB’s move to raise the percentage of foreigners’ ownership is similar to that of Qatar Islamic Bank, Qatar’s largest Islamic bank, at the end of February, when its General Assembly approved raising the non-Qatari ownership stake to 49% instead of 25 per cent, after losses during the past year. Qatar Islamic Bank’s total revenue fell 2.6 per cent in the fourth quarter ending in December 2017 to 925.6 million riyals after weak interest and investments. About a week ago, media sources cited Qatar Central Bank’s research into the merger of three Qatari banks, saying that Qatar’s Rayan Bank had referred studies to merge with the banks of Barwa and Qatar International for the Qatar Central Bank to give an opinion, pointing out that there was discussion and assessment of legal, . The decline in total non-resident deposits in Qatari banks since May to December 2017 was about $ 12.4 billion, according to a report by Qatar Central Bank mid-month. While Bloomberg estimated the volume of fugitive deposits during that period at more than $ 22 million. Standard & Poor’s Global said in a report released earlier in the year on its 2018 forecast that asset quality at Qatari banks could be further pressured by economic activity, including real estate and hospitality, Banks. There is a significant correlation between any possible escalation or calming of boycotts and the decline or stabilization of asset quality at Qatari banks. Qatar relies on foreign deposits to support its banking system, as low oil prices have reduced liquidity as Doha plans to spend $ 200 billion to host the 2022 World Cup. The Gulf states have been an important source of foreign liquidity in Qatari banks, but since the start of the crisis, several Gulf banks and institutions have been forced to withdraw most of their money from Qatari banks. Investors from outside the Gulf region have also withdrawn their deposits from Qatar as concerns over the impact of the crisis on Qatar’s economy. neighboring countries. This prompted the Qatari government to intervene in an effort to avert a liquidity crisis in its banking system and help banks continue lending and financing government projects, according to Standard & Poor’s Financial Services Manager. To fill the gap, Qatar has mainly sought to sell assets owned by the Qatari sovereign fund abroad and to abandon several important investments, including shares in Credit Suisse, Russian oil giant Rosneft and Tiffany Jewelery. In September, Moody’s said Qatar pumped nearly $ 39 billion into its economy as a whole in the first two months of the province. An official at the credit rating agency predicted that the escape of deposits from the Qatari banking system will continue this year as the boycott continues.