Qatar's market manipulation fears fueled by 'abnormal'
derivative moves: bank CEO
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[April 04, 2018]
By Dmitry Zhdannikov and ghaida ghantous
DOHA (Reuters) - Qatar's top bank QNB <QNBK.QA>
is helping the country's authorities with data and expertise to probe if
Qatar's neighbors manipulated its markets, including credit default
swaps (CDS), during a political standoff last year, its CEO told
Reuters.
Qatar's central bank said in December it had launched a legal
investigation into attempts by countries opposed to it to harm the
Qatari economy by manipulating the currency, securities and derivatives
markets.
Qatar National Bank (QNB) Chief Executive Ali Ahmed al-Kuwari said in an
interview there had been unusual moves in Qatari CDS late last year.
"The behavior was abnormal ... the way it was moving very fast, this is
not normal behavior. The dust around the crisis settled after two
months, but the CDS continued to go up for no reason," he said,
estimating the Qatari CDS market at $21 billion.
Al-Kuwari said QNB was cooperating with the central bank in its
investigation and had been "supplying them with any information or data
they asked us to supply them with."
QNB, the Middle East's largest lender by assets, is 50 percent owned by
the Qatar Investment Authority, Qatar's sovereign wealth fund.
Saudi Arabia, the United Arab Emirates, Bahrain and Egypt imposed an
economic boycott on Qatar last June, accusing it of backing terrorism,
which it denies. The boycott led to the withdrawal of billions of
dollars of deposits from Qatari banks.
Last month, Qatar's central bank asked U.S. regulators to investigate
the U.S. unit of the largest bank in the United Arab Emirates, accusing
it of "bogus" foreign exchange deals designed to harm its economy as
part of a blockade by Gulf neighbors.
First Abu Dhabi Bank <FAB.AD>, parent of the U.S. subsidiary, NBAD
Americas, denied it had tried to manipulate the Qatari riyal.
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Qatar National Bank group chief executive Ali Ahmed al-Kuwari speaks
to reporters during the inauguration of QNB's branch in Riyadh,
Saudi Arabia, May 4, 2017. REUTERS/Faisal Al Nasser
The request for a U.S. investigation deepened the diplomatic crisis between
Qatar, a major gas exporter, and its Gulf neighbors.
Asked if there was concern about further attempts to manipulate Qatar's economy,
al-Kuwari said: "This is a major offence. People will have to think about the
consequences. And especially now with the legal case on the table, I assume
people will think twice before going further into these actions."
Al-Kuwari said that despite a substantial withdrawal of deposits at the start of
the Gulf crisis in the middle of last year, deposits at QNB grew 13 percent for
the whole of 2017.
He said the trend will likely be sustained in the first quarter across the
entire Qatari banking sector thanks to higher oil and gas prices and renewed
confidence in the economy.
Al-Kuwari said QNB had repaid a cash injection it received from Qatar's central
bank at the peak of the crisis last year.
He did not give the amount but said it represented a fair share among Qatari
banks. He said the overall injection amounted to around $20 billion for the
whole of the banking sector, half of which is controlled by QNB.
Qatar was able to beat the crisis partly thanks to a big cash buffer of $350
billion in central bank reserves and assets at the Qatar Investment Authority,
which include stakes in major companies including Glencore <GLEN.L> and
Volkswagen <VOWG.DE>.
(Editing by Adrian Croft)
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