Biggest Qatar Bank Is Weighing Funding Options While Gulf Spat Drags On

Updated on
  • QNB held talks with banks for private placement, bond or loan
  • Foreign deposits may fall as banks refuse to roll over

Qatar National Bank QPSC is considering options to raise financing, people familiar with the matter said, as an ongoing standoff with its Gulf neighbors threatens to weaken liquidity in the gas-rich country,.

The Middle East’s largest lender by assets held early discussions with international banks about the possibility of a private placement, bond sale or loan in the fourth quarter, said the people, asking not to be identified because the information is private. Final decisions haven’t been made and the bank may decide against a deal, the people said.

There is no definite decision in this regard, a QNB spokesperson said.

Qatari lenders are under pressure after Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic relations and closed transport routes in June, accusing the nation of funding Islamist terrorism, a charge it denies. Foreign deposits at Qatar’s banks may fall further after dropping the most in almost two years in June as some Gulf lenders refuse to roll over holdings, people with knowledge of the matter said last week.

“Finding reasonable financing options for QNB now has a signaling effect that it sends out to the market, namely it does not rely solely on Qatari Central Bank liquidity actions and can access various funding options in a difficult environment quite easily,” said Sergey Dergachev, who helps oversee about $14 billion in assets as a senior money manager at Union Investment Privatfonds GmbH in Frankfurt. “The window of opportunity to issue now is excellent because currently there is less noise around the Saudi-Qatar dispute.”

The bank’s expansion into Asia is helping QNB offset the impact of the Saudi-led spat, Chief Executive Officer Ali al-Kuwari said last month. QNB aims to cut the income generated from its domestic market to 50 percent by 2020 from about 63 percent currently, al-Kuwari said.

(Updates with analyst comment in the fifth paragraph.)
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