Qatari banks started seeking funds from Asia and Europe after clients from Arab states withdrew billion dollars from their accounts, following the quartet-boycot of Saudi Arabia, UAE, Bahrain and Egypt to Qatar.
While the Qatari government has placed large deposits in banks to help offset the outflows, banks are trying to find new private funding as analysts warn there are likely to be more heavy withdrawals in the coming months, Reuters reported.
Two sources told Reuters that Qatar National Bank (QNB) has held talks, arranged by banks including Standard Chartered, with investors in Taiwan about a private placement of Formosa bonds.
Qatar Islamic Bank, the country’s largest Islamic bank, has recently raised funds through private placement deals in Japanese yen and Australian dollars. It is now exploring more such deals in Europe and Asia, as well as a certificate of deposit program and a Murabaha – to raise cash, according to an international banker.
A spokesman for Qatar National Bank said: “We have several proposals for a Formosa issue from several international banks dealing in that part of the world.” However, he added that nothing had yet been agreed or decided on the timing of the issue or the choice of advisers.
Many Qatari banks are facing greater urgency to secure funding since June – the crisis has led to an outflow of around $7.5 billion in foreign customers’ deposits and a further $15 billion in foreign interbank deposits and borrowings, believed to be mainly from those four boycott countries, Qatari central bank data shows.
Analysts estimate a further $3 to $4 billion could leave in the coming months. In response, Qatar’s government deposited nearly $18 billion with local banks in June and July, according to the same data.
The exodus of cash was a threat to liquidity and likely to increase competition among Qatari banks for deposits, pushing up funding costs and squeezing margins, Fitch Ratings warned on Wednesday.
Before the crisis, Europe was the largest source of total funding, including deposits and wholesale funding, for Qatari banks. This was slightly ahead of clients in member states of the six-nation Gulf Cooperation Council, of which Qatar remains a member.