Qatari Banks Seek Doubling Foreign Ownership Limit to Push through Crisis

Qatari Banks Seek Doubling Foreign Ownership Limit to Push through Crisis

Tuesday, 13 March, 2018 - 12:45
A man counts Qatari riyal notes at a money exchange. (Reuters)
London - Asharq Al-Awsat
Qatar’s National Bank, one of the gas-rich peninsula’s biggest banks, announced that it was doubling its foreign ownership limit to 49 percent.

Sources speculated that the move is aimed at pumping funds as the boycott imposed against Qatar by Saudi Arabia, Bahrain, Egypt and Bahrain enters is ninth month.

The four countries severed diplomatic and economic ties with Doha over its support and financing of terrorism.

“QNB Group intends to recommend to the Extraordinary General Assembly of the Bank, to approve increasing the percentage of non-Qatari ownership in the company’s capital to 49 percent instead of 25 percent,” read a statement released by QNB.

The bank said it would announce the date for the EGA “in due course.”

The Qatari economy has suffered from the crisis, but the banking sector in particular has experienced catastrophic migration of deposits and investments.

The government has taken a number of measures to save itself from liquidity problems, including injecting about $ 43 billion to support banks, according to Standard & Poor's estimates.

The decline in total non-resident deposits in Qatari banks since May to December 2017 was about $12.4 billion, said a report by Qatar Central Bank. But Bloomberg estimated the volume of deposit outflow during that period at over $ 22 million.

Standard & Poor's Global said in its 2018 forecast report that assets at Qatari banks could be further pressured by economic activity, including real estate and hospitality. There is a significant correlation between any possible escalation or calming of boycotts and the decline or stabilization of asset quality in Qatari banks.

Qatar relies on foreign deposits to support its banking system, as low oil prices have reduced liquidity with Doha planning to spend $200 billion to host the 2022 FIFA World Cup.

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