* $18 bln of deposits from blockade nations mature in two
* Government will cover withdrawals if needed
* Other international banks in QFC providing funds
* No retaliation against companies from blockade nations
* Exchange-traded funds to go ahead around end of August
(Recasts to focus on deposit withdrawals, adds comments on
foreign contracts, ETFs)
By Tom Finn
DOHA, June 19 Qatar's government is prepared to
support local banks if foreign institutions withdraw deposits
from them because of an economic boycott against Doha, the chief
executive of the Qatar Financial Centre (QFC) said on Monday.
Yousef al-Jaida 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those funds if they are withdrawn, and other banks in the QFC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 U.S. 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. The centre has its own legal,
regulatory, tax and business infrastructure, allowing for 100
percent foreign ownership and full repatriation of profits.
Jaida said the QFC did not plan to take any action against
companies from Saudi Arabia, the UAE or Bahrain in response to
the sanctions by their governments, which accuse Doha of backing
"We do not intend to take any measures on any businesses in
Qatar from the blockade countries. We have Saudi and Bahraini
banks in the QFC," he said.
"It remains business as usual, and we intend to keep it that
way. There are five companies at the QFC from Saudi and
However, Jaida said countries imposing the sanctions had
restricted some of their companies from doing business in Qatar,
which was affecting about $2 billion of these companies'
contracts in areas such as construction, professional services
and export of materials. He did not give details.
The UAE central bank has asked banks to apply "enhanced
customer due diligence" when dealing with six Qatari banks,
making the UAE institutions reluctant to do fresh deals.
Guidance from the Saudi and Bahraini central banks has also
deterred new business with Qatar, bankers told Reuters.
Jaida said the QFC had cancelled plans to hold a roadshow
for potential customers in Dubai this year because of the
But he said there could be long-term 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.
The Qatar Exchange has been planning to introduce
exchange-traded funds as part of a drive to develop the stock
market. Jaida said this plan would not change despite the
market's 8.6 percent tumble since the sanctions were
"Coming to a product like an ETF, there might be an impact
in terms of raising capital for that particular project. We
intend to step in and launch that project regardless of whether
there is capital or not," he said, adding that the funds would
be launched at the end of August or the start of September.
(Writing by Andrew Torchia; Editing by Hugh Lawson)