Qatar tells banks to tap international investors to raise financing

Move is to reduce reliance on state funding, amid impact of ongoing Saudi-led boycott

The Qatari Stock Exchange in Doha. Qatar’s economy has been hit by the sanctions imposed by a Saudi-led Arab bloc. Photograph: AFP

The Qatari Stock Exchange in Doha. Qatar’s economy has been hit by the sanctions imposed by a Saudi-led Arab bloc. Photograph: AFP

 

Qatar is telling its banks to tap international investors to raise financing, instead of mainly relying on government funding, as the impact of the ongoing Saudi-led boycott puts pressure on liquidity.

The central bank is holding regular meetings with lenders to gauge how the standoff is affecting liquidity, and is encouraging banks to borrow internationally through bonds and loans to avoid further depletion of foreign reserves and credit-rating downgrades, said sources who asked not to be identified because the matter was private.

Banks have been told they should ask for government funding as a last resort, they said.

Some banks and government-related entities are planning fundraising deals to help with tightening liquidity, the people said. Most borrowers plan to target investors in Asia to fill the gap left by Gulf lenders, they said.

Qatar Islamic Bank SAQ recently raised financing in yen and Australian dollars through private placements. The central bank couldn’t immediately comment.

Islamist terrorism

Qatari lenders are under pressure after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations and closed transport routes in June, accusing the nation of funding Islamist terrorism, a charge it denies.

Foreign deposits dropped the most in two years in June and may fall further as some Gulf lenders refuse to roll over holdings, people with knowledge of the matter said.

Qatar National Bank QPSC, the country’s largest, held early discussions with international lenders about a private placement, bond sale or loan, while Commercial Bank QSC sent a request for proposals for a dollar loan for at least $500 million.

Doha Bank QSC is also seeking to raise funds via a private placement of dollar bonds, other people said.

Qatar Investment Authority, the country’s sovereign wealth fund, placed billions of dollars of cash with Qatari lenders shortly after the standoff started as some banks in Saudi Arabia, the UAE and Bahrain started withdrawing funds from the country. – (Bloomberg)