Qatar’s government is prepared to support local banks if foreign institutions withdraw deposits from them because of an economic boycott against Doha.
Yousef al-Jaida, Chief Executive of the Qatar Financial Center, said institutions from Saudi Arabia, the United Arab Emirates and Bahrain, which broke off diplomatic and transport ties with Qatar on June 5, had about $18 billion of deposits in Qatari banks that would mature in two months. If necessary, the Qatari government will step in to cover those funds if they are withdrawn, and other banks in the QFC are still providing short-term US dollar deposits to Qatar’s banking sector, he told reporters. “Whether the blockade countries make a decision on retracting those deposits is yet to be seen. Those mature in a couple of months, so there’s no impact as of yet. But this is a measure and a point that we are paying close attention to. “We’ve been in a worse crisis in 2008, a financial crisis not a political crisis, and the government was able to step in and buy out the default portfolios of loans and real estate at that time. If a need arises, the government can easily step in and enforce similar measures.” The QFC licenses foreign companies to exempt them from the Gulf state’s local ownership laws.
Jaida said the QFC had cancelled plans to hold a roadshow for potential customers in Dubai this year because of the diplomatic rift. But he said there could be longterm benefits for the QFC and Qatar, as companies which had previously served Qatar from bases in neighbouring countries now had no option but to establish offices in Doha. “Law firms, consultancies, professional service companies were told not to access Qatar for no other reason than government decisions. We intend to leverage and take full advantage of this opportunity,” Jaida said. Qatari companies with operations in the Dubai International Financial Centre are now looking to pull them back to Qatar, he said, without giving details.