Doha in trouble: Historic shortfall in assets of Qatari banks

Robeir al-Fares

Doha is still suffering from the effects of the Arab boycott, as media reports confirmed the exacerbation of the balance deficit of Qatari foreign assets to an unprecedented historical level in July, driven by the increase in financial claims owed by banks in foreign currency and the decline of their assets in foreign exchange. This comes amid the escalation of the liquidity crisis in currencies other than the riyal due to the failed policies of the Qatari regime and its devotion to supporting and financing terrorism around the world, as well as placing the Qatari treasury at the service of Erdogan’s delusional empire.

According to data issued by the Qatar Central Bank (QCB), the deficit of foreign assets of Qatari banks rose in July by 14 billion Qatari riyals ($3.84 billion), compared to June’s figures.

The total deficit of net foreign assets of banks operating in the local market was about 334.5 billion riyals ($92 billion) at the end of July, up from 320.6 billion riyals ($88.12 billion) until the end of June.

On an annual basis, the deficit of foreign assets of banks in Qatar increased by 24.2%, as the deficit was recorded as of the end of July 2019 at about 269.23 billion riyals ($74 billion), according to official 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 owned by those banks, such as the facilities provided to clients and any foreign exchange money owned.

According to data from the QCB, the total funds requested from commercial banks in Qatar in foreign exchange (dollars and euros), amounted to about 560 billion riyals ($154 billion) by the end of July.

On the other hand, the total value of assets in foreign exchange owned by those banks amounted to about 225.5 billion riyals ($61.98 billion) as of the end of July.

The provision of foreign exchange in Qatar has been one of the most prominent challenges facing the QCB and other banks since the decision to boycott Doha in 2017 and the exit of foreign liquidity to more stable markets, which pushed the state and banks to turn to debt markets.

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

In March 2018, the International Monetary Fund (IMF) said that the QCB compensated residents and foreigners’ deposits and investments exiting banks as a result of the boycott with a total value of $40 billion.

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

Likewise, many banks operating in the local market, most notably the Qatar National Bank Group (QNB), have gone to foreign debt markets more than six times to obtain funds in foreign currency by issuing bonds of varying maturities.