By Zainab Fattah and Archana Narayanan
Qatar is telling its banks to tap international investors to raise financing, instead of mainly relying on government funding, people familiar with the matter said, 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 the people, asking not to be identified because the matter is 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, one of the people said. The central bank couldn’t immediately comment.
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, people familiar with the matter said this month. Doha Bank QSC is also seeking to raise funds via a private placement of dollar bonds, other people said.
Qatari banks are also finding it harder to obtain short-term funding as international banks are asking them to pledge assets outside of Qatar instead of domestic ones to reduce the risk linked to the loans, the 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 U.AE. and Bahrain started withdrawing funds from the country, people said in June.