Qatar ban 'a blow to banks'

Doha, February 15, 2011

Qatar's order that conventional banks stop offering Islamic banking services will have a negative impact on those banks and benefit Islamic ones, Moody's rating agency has said.

'The loss of Islamic banking franchise is credit-negative for Qatari conventional banks, which derive 10 to 15 per cent of their yearly earnings from Sharia-compliant banking,' Moody's was quoted as saying in a report in our sister newspaper Gulf Daily News.

It added that Islamic banks will benefit from access to a larger pool of customers and have better profit margins.

Qatar Central Bank last week ordered conventional banks to stop offering Islamic banking service and wind down their balances by the end of the year.

Moody's said conventional banks would lose between 8 per cent and 16 per cent of their deposit base, total assets and profits.

Worst affected will be the largest commercial bank, Qatar National Bank, which has a 39 per cent share of the banking market and a 20 per cent share of the Islamic banking market, Moody's said.

The Commercial Bank of Qatar and Doha Bank, the second and third-largest commercial banks, have 12 per cent and 9 per cent of the market respectively.

Tags: Qatar | banking | investment | Ban | Islamic Finance | Moodys |