According to the group chief executive of the Middle East’s largest bank by assets, in comparison to the gas-rich state of Qatar that they are targeting, the Arab countries that have cut ties with Qatar may have more to lose from the spat.
Qatar was accused of supporting terrorism and allying with regional foe Iran by Saudi Arabia, United Arab Emirates, Egypt and Bahrain when the blockade first unfolded in June. There was a drop in the stock market and currency of Qatar which suffered from the initial shock of the crisis even though Qatar denied the claims made by the banning countries.
Right after the rift began, the largest fall in non-resident deposits in almost two years was also experienced by the country. Non-resident deposits declined 7.6 percent to 170.6 billion Qatari riyals ($46 billion) in June from the month before, data by the Qatar Central Bank showed.
And ironically, the countries that initiated the blockade was the origin of part of the money that left Qatar. But Ali Ahmed Al-Kuwari, group CEO of Qatar National Bank that the drained-out money represents only 3 to 4 percent of total deposits in the banking system and that reaction of the investors was on expected lines.
“I think to replace 3 to 4 percent is not a big deal and let me also remind you there is a two-way relationship. So there’s deposits coming from the countries to Qatar and vice versa, Qatar has investments in these economies so it’s fair to say for every dollar lost on one side, there’s a dollar lost on the other side,” he said.
“Sometimes it’s a dollar and a half or two dollars from one side over the other because Qatar is not dependent on these economies, while some countries are dependent on trade flows with Qatar. So it’s important to say this: Qatar also has deposits in the region,” he said.
And with the economy and financial system still strong, despite the blockade, business is pretty much running as usual in the country other than outflows in deposits, Al-Kuwari said. He posited that it is a good opportunity for Qatar to press on with strengthening its economy and acknowledged that the standstill could continue for some time.
Qatar is growing sectors such as education, healthcare and tourism as it has started diversifying its growth model away from the energy sector despite it being the world’s largest gas exporter.
Turnings to markets in Asia and Europe, Qatari banks have also started tapping international markets for funds. Al-Kuwari said that a bond issuance in Taiwan worth $630 million on Wednesday was closed by Qatar National Bank itself.
“This is an ongoing exercise for us, with or without the crisis, to tap into the markets and help us fund our books,” he said.
(Adapted from CNBC)