Riyadh – Economists expect Qatari banks to undergo their toughest stage in the coming days and to enter the phase of international institutions’ short-term deposits drying up amid the rise of Qatar interest rate index, knowing that the lending cost is the highest since seven years.
Mohammed Khnifer, an Islamic financial specialist, said that Qatari banks are expected to suffer in regards of extending the term of short-term deposits of international institutions in case the credit rating agencies reduced Qatari banks rating.
Speaking about the impact of withdrawing deposits by Gulf banks on the Qatari banking sector (8 percent of total liabilities, according to Standard & Poor’s), Khnifer said that until now no official guidelines have been issued by the Gulf central banks for domestic banks to withdraw deposits from Qatar and that what happened in the previous period were only protective measures towards short-term deposits.
He added, “Yet, the figures of the Qatari monetary market indicate that Qatari banks have started pricing the shortage of liquidity in the Interbank Lending Market and this shows clearly from the Qatar Interbank Offered Rates (QIBOR).”
He continued, “When we use official figures provided by the Qatar Central Bank, we find out that the interest rate has reached 2.12 on Monday compared to 1.86 percent seven days earlier. This means that QIBOR rose 35 points in the past days.”
Khnifer saw that the Qatari banking sector has started to suffer the increase of funding cost in domestic monetary markets and this would put pressure on markups of these banks and affect the companies that borrowed by a floating rate linked to QIBOR.