When times are tough, it’s good to know who your friends are.
During the boycott of the Gulf country by a Saudi-led bloc that started in early June, which foreign partners have maintained business with them and which ones have scaled back lending are being kept track of by Qatar’s banks.
According to three bankers briefed on the matter, a list that may be used when deciding who to give future business to in Qatar is intended to by drawn up by the central bank.
A spokesperson of the state-owned Qatar National Bank said that the bank will “decide in the long term to focus our business with partners that were not influenced by the current situation,” and the largest commercial bank of Qatar is monitoring which foreign institutions have ignored pressure. He said that the lender known as QNB, not instigated by the central bank “or any government agency” and added that this was “normal banking practice” at the lender.
As the diplomatic spat in the Gulf pits some of the region’s largest countries against the world’s richest nation per capita, how international bankers are having to navigate a political minefield is showed by this incident. Qatar is spending billions of dollars to turn Doha, the capital, into a regional hub and on preparing to host the soccer World Cup.
After accusing the nation of destabilizing the region with support of Islamist movements, a charge Qatar vehemently denies, Saudi Arabia, the United Arab Emirates, Bahrain and Egypt severed diplomatic ties and transport routes with Qatar on June 5.
The idea of a list of foreign institutions was driven by the central bank, whose governor summoned the heads of the country’s lenders shortly after the boycott started, said the bankers, who asked not to be identified because of the sensitivity of the situation. whether international banks increased, kept steady or reduced their business was asked to be rated by Qatar’s central bank.
The central bank declined to comment.
The showdown with the Saudi-led group is taking its toll while Qatar gets its riches from exporting liquefied natural gas from a giant field it shares with Iran. Instead of mainly relying on government funding, people familiar with the matter said that the central bank has told its banks to tap international investors to raise financing. Foreign deposits in Qatari banks declined 7.9 percent in July from June.
While the Financial Times reported on Aug. 9 that the lenders with large Qatari shareholdings aren’t likely to win any significant contracts in Abu Dhabi, bankers have been told by officials in Abu Dhabi, the U.A.E.’s wealthiest and largest sheikhdom. Those include Credit Suisse Group AG, Barclays Plc and Deutsche Bank AG, all of which Qatar’s sovereign wealth fund or members of the nation’s ruling family hold stakes in, the London-based newspaper reported.
(Adapted from Bloomberg)