London/Dubai: 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.
Some banks based in Saudi Arabia, the UAE, Bahrain and Egypt, aren’t extending deposits with Qatari lenders when they mature, said the people, asking not to be identified because the information is private.
Non-resident deposits in Qatari banks in June posted their biggest decline since November 2015. Four Gulf states severed diplomatic and transport links with Qatar that month, accusing it of supporting extremist groups. Qatar denies the charges.
Domestic funds
Foreign deposits dropped 7.6 per cent to 170.6 billion riyals (Dh171 billion, $47 billion) from a month earlier, according to central bank data.
The slide in non-resident holdings, which account for 22 per cent of overall deposits, comes even after local lenders raised interest rates to try and attract foreigners.
The Qatar three-month interbank offered rate, a benchmark used to price some loans, climbed to 2.49 per cent on August 3, while a similar rate in Saudi Arabia was at 1.8 per cent and 1.53 per cent in the UAE, according to data compiled by Bloomberg.
