Dubai’s Mashreq sees drop in demand for Qatar business

Mashreq, Dubai’s third-largest bank by assets, has seen a drop off in demand for business in Qatar since a dispute erupted between the Gulf state and its neighbours, CEO Abdulaziz al-Ghurair said.

Banks in the United Arab Emirates are facing obstacles to doing business in Qatar after the central bank asked them to stop dealing with a number of individuals and entities with alleged links to Doha, as well to apply enhanced due diligence for any accounts they hold with six Qatari banks.

Mashreq was the first UAE lender to open an office in Qatar under its previous name of Bank of Oman and has provided Qatari clients such as Ezdan Holding with financing.

“The business between banks in the UAE and Qatar for those that have business there, there is no restriction so normal operations will continue,” al-Ghurair told Reuters. “But there is no demand from the clients.”

Some clients were waiting to see how the crisis unfolded before making financing decisions, al-Ghurair said.

The Qatar bank’s funding was coming from the local Qatar market, said al-Ghurair, who is also chairman of the UAE Banks Federation (UBF).

Banks in Qatar have seen an outflow of some foreign deposits since June 5 when UAE, Saudi Arabia, Bahrain and Egypt cut diplomatic and transport ties with Doha.

Deposits by foreign customers at banks in Qatar fell by QAR14bn ($3.9bn) in June from the month earlier, Qatari central bank data showed on Thursday.

Mashreq’s operating income in other Middle East countries from external customers was Dhs401.9m in the six months to the end of June, around 13 per cent of the bank’s total operating income, and down from Dhs467.6m in the same period of last year.

In addition to Qatar, Mashreq also operates in Kuwait, Bahrain and Egypt in the Middle East outside UAE.