Qatar sovereign fund deposited dollars in local banks as precaution -bankers


* Banks don't need dollar liquidity at present
    * Deposit withdrawals have been minimal, banker says
    * But government acts in case of withdrawals in coming
    * Ready to provide more dollar or riyal liquidity
    * Central bank remains committed to peg - banker

    By Tom Arnold and Tom FinnDOHA, June 20 (Reuters) - Qatar's sovereign wealth fund made
U.S. dollar deposits in some local banks last week as a
precaution after Saudi Arabia and other Gulf states cut
diplomatic and transport ties with Doha, Qatari commercial
bankers said.
    One Qatar-based banker, whose own institution received
funds, said new deposits in the banking system by the Qatar
Investment Authority (QIA) at the end of last week were believed
to total several billion dollars. He described the deposits as
    At a recent meeting between top commercial bank executives
and central bank officials, the executives said they did not
need dollar liquidity at present, the banker told Reuters,
declining to be named because of commercial sensitivities.
    But if the diplomatic crisis lasts another three or four
months, and Saudi Arabian and United Arab Emirates banks pull
their deposits out of Qatar, local banks might need official
help, the banker said.
    The QIA declined to comment. Asked for comment, a central
bank official told Reuters:
    "QIA regularly place deposits in local banks - this is
normal. Contrary to media reports, there haven't been big
withdrawals from banks in Qatar, and the embargo is only having
a limited effect on the banking sector here, and one that is
easily manageable."
    Qatar's banks became dependent on foreign funding during the
last few years of strong economic growth. Their foreign
liabilities increased to 451 billion riyals ($124 billion) in
March from 310 billion riyals at the end of 2015.
    Yousef al-Jaida, chief executive of the Qatar Financial
Centre, said this week that institutions from Saudi Arabia, the
UAE and Bahrain had about $18 billion of deposits in Qatari
banks that would mature in two months.
    He said it was not yet clear whether those countries would
decide to have their institutions pull the money out, but added
that Qatar's government was prepared to step in and support
local banks if needed.
    The Centre has a legal, regulatory, tax and business
infrastructure, and licenses foreign companies to exempt them
from local ownership laws.
    Both the QIA and the central bank have told the banking
community that they are ready to assist local banks further with
dollar or riyal funding, said the Qatar-based banker.
    He said that so far, only one UAE institution, a
government-linked-firm, had pulled deposits from his bank,
asking to withdraw a three-month deposit of about $100 million
    Many depositors have been asking questions, but nobody else
has asked for their money back and one Asian asset manager has
continued to place deposits, he added.
    The central bank has about $34.5 billion of net foreign
reserves and the QIA is believed to hold over $200 billion of
liquid assets, so Qatar appears to be in no danger of running
out of money to protect its banking system.
    The QIA owns stakes in several Qatari banks including 50
percent of Qatar National Bank <QNBK.QA>, the largest lender,
and a 16.9 percent stake in Qatar Islamic Bank <QISB.QA>, the
largest sharia-compliant lender by assets.
    The Qatari riyal <QAR=>, which is pegged at 3.64 to the U.S.
dollar, has moved slightly off the peg since the diplomatic
crisis began on June 5, and is now quoted by banks offshore at
around 3.67.
    The Qatari banker said the central bank had not issued any
specific warnings to banks about speculating against the peg,
but it was committed to the peg and the only institutions
speculating in the foreign exchange market were hedge funds and
some other international investors.

 (Writing by Andrew Torchia; editing by David Stamp)
 ((andrew.torchia@thomsonreuters.com; +9715 6681 7277; Reuters
Messaging: andrew.torchia.thomsonreuters.com@reuters.net))


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