Qatar’s banks are on the brink of a precipice … a...

Qatar’s banks are on the brink of a precipice … a...
Qatar’s banks are on the brink of a precipice … a...
Last August, the deficit of the foreign exchange assets of Qatari banks surpassed the previous historical level recorded in July 2020, amid the increasing needs of Doha for foreign exchange to cover its dues in currencies other than the riyal.

A survey conducted by Al-Ain News, on Tuesday, referring to data issued by the Qatar Central Bank, showed that the foreign assets deficit of Qatari banks rose last August by 18.18 billion riyals ($ 5 billion), compared to last July’s figures.

The total deficit of banks operating in the Qatari market with net foreign assets amounted to about 352.68 billion riyals (96.94 billion dollars), up from 334.5 billion riyals (92 billion dollars) at the end of last July.

While on an annual basis, the deficit of foreign assets of banks in Qatar increased by 26.4%, as the deficit was recorded until the end of August 2019 about 278.8 billion Qatari riyals (76.6 billion US dollars), according to official data.

Bank assets

According to data, the net assets balance of banks in Qatar consists of the total liabilities owed by banks in foreign currency, such as foreign deposits of all kinds (savings, current, and term), and the debt instruments issued by them (bonds, bills, sukuk), minus the total assets they own Those banks, such as the facilities they provide to clients and any foreign exchange money they have.

According to data from the Qatar Central Bank, the total funds required from commercial banks in Qatar, in foreign exchange (dollars and euros), amounted to about 567.2 billion Qatari riyals (155.9 billion dollars) by the end of last August.

On the other hand, the total value of assets (assets) in foreign exchange owned by those banks operating in the Qatari market amounted to about 214.5 billion Qatari riyals (59 billion US dollars), as of the end of last August.

The provision of foreign exchange in Qatar is one of the most prominent challenges facing banks and the Qatar Central Bank, since the decision to boycott Doha in 2017, and the exit of foreign liquidity to more stable markets, pushing the state and banks to turn to debt markets.

In June 2017, Saudi Arabia, the UAE, Bahrain and Egypt cut diplomatic relations and transport lines with Qatar, due to Doha’s support for terrorism. What negatively affected its economy, its indicators and sectors, and raised the risk in the banking market.

In March 2018, the International Monetary Fund said that the Qatar Central Bank had compensated residents and foreigners’ deposits and investments exiting banks due to the boycott, with a total value of $ 40 billion.

During the current year, the Qatari government, through the Ministry of Finance, went to foreign debt markets to provide liquidity in foreign exchange by issuing bonds denominated in US dollars and others in Chinese yuan.

In addition, many banks operating in the local market, most notably the Qatar National Bank Group, have gone to foreign debt markets more than 6 times, to obtain funds in foreign exchange by issuing bonds of varying maturities.

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