Identifier
Created
Classification
Origin
09DOHA369
2009-06-02 12:31:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Doha
Cable title:
QATAR PRIMES LOCAL BANK LENDING
how-toVZCZCXRO8350 PP RUEHDE RUEHDH RUEHDIR DE RUEHDO #0369 1531231 ZNR UUUUU ZZH P 021231Z JUN 09 FM AMEMBASSY DOHA TO RUEHC/SECSTATE WASHDC PRIORITY 9115 INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
UNCLAS DOHA 000369
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EFIN QA
SUBJECT: QATAR PRIMES LOCAL BANK LENDING
REF: DOHA 135
--------------
(U) KEY POINTS
--------------
-- Qatar announced 28 May its readiness to inject up to
another USD 4.1 billion into local banks by offering to buy
their real estate assets.
-- This is the third time since October 2008 the GOQ has
intervened in the local banking sector. The government used
its sovereign wealth fund, the Qatar Investment Authority
(QIA),to take equity stakes in local banks last winter, and
bought several large investment portfolios from the banks
this spring.
-------------
(SBU) COMMENT
-------------
-- There is no authoritative data, but various commercial
estimates indicate Qatar's residential real estate prices
have dropped about 30 percent in Doha with land prices
dropping between 40 inside, and 70 percent outside, the
capital. Bank lending to domestic real estate had all but
dried up over the past few months, and the GOQ intends this
intervention to prime more lending to the sector and across
the economy.
-- In the absence of formally declared guarantees and deposit
insurance schemes, the GOQ announcement is a loud statement
of support for the banks.
-- A credit slowdown and real estate downturn
notwithstanding, Qatar's economy is projected to grow at 10
percent in 2009, an extraordinary figure, given the severity
of the global downturn. The goernment's large role in the
economy and the strength of its balance sheets due to ramping
hydrocaron exports is the primary reason for this growth.
End Key Points andComment.
UNCLAS DOHA 000369
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EFIN QA
SUBJECT: QATAR PRIMES LOCAL BANK LENDING
REF: DOHA 135
--------------
(U) KEY POINTS
--------------
-- Qatar announced 28 May its readiness to inject up to
another USD 4.1 billion into local banks by offering to buy
their real estate assets.
-- This is the third time since October 2008 the GOQ has
intervened in the local banking sector. The government used
its sovereign wealth fund, the Qatar Investment Authority
(QIA),to take equity stakes in local banks last winter, and
bought several large investment portfolios from the banks
this spring.
--------------
(SBU) COMMENT
--------------
-- There is no authoritative data, but various commercial
estimates indicate Qatar's residential real estate prices
have dropped about 30 percent in Doha with land prices
dropping between 40 inside, and 70 percent outside, the
capital. Bank lending to domestic real estate had all but
dried up over the past few months, and the GOQ intends this
intervention to prime more lending to the sector and across
the economy.
-- In the absence of formally declared guarantees and deposit
insurance schemes, the GOQ announcement is a loud statement
of support for the banks.
-- A credit slowdown and real estate downturn
notwithstanding, Qatar's economy is projected to grow at 10
percent in 2009, an extraordinary figure, given the severity
of the global downturn. The goernment's large role in the
economy and the strength of its balance sheets due to ramping
hydrocaron exports is the primary reason for this growth.
End Key Points andComment.
1. (U) In announcng the move, Prime Minister Hamad Bin
Jassim Al hani said the government would have a ceiling of
5 billion Qatari Riyals (USD 4.1 billion) for buyig loans
and the action is being taken "so that the banks can continue
to play their vital role in the national economy and
accelerate domestic growth."
2. (SBU) Embassy's banking sector contacts hailed the GOQ
announcement and view the intervention as helping to prevent
problems with their balance sheets down the road. It also
appears that the Qatari action was taken on the government's
initiative, and not in reaction to a clamor for help from
local banks. Details remain unclear - i.e., whether the GOQ
or institutions will decide which assets to sell to the
government.
3. (SBU) Banks' real estate portfolios have grown quickly in
recent years, though only 13 percent of total credit
facilities are allocated to real estate, based on Central
Bank figures from last year. Moreover, banks are restricted
from lending more than 15 percent of their total portfolio to
the real estate sector. A GOQ buyout of the banks' assets
would free up their books to allow more lending.
4. (U) The Doha Securities Market (DSM) responded positively
to the news, jumping almost 6 percent on Sunday.
5. (SBU) Embassy's banking contacts were less sanguine about
the state of commercial lending, which remains a problem and
the area most likely to see a rise in non-performing loans.
In recent years, many banks (and borrowers) over-extended
themselves via easy credit for personal loans.
LeBaron
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EFIN QA
SUBJECT: QATAR PRIMES LOCAL BANK LENDING
REF: DOHA 135
--------------
(U) KEY POINTS
--------------
-- Qatar announced 28 May its readiness to inject up to
another USD 4.1 billion into local banks by offering to buy
their real estate assets.
-- This is the third time since October 2008 the GOQ has
intervened in the local banking sector. The government used
its sovereign wealth fund, the Qatar Investment Authority
(QIA),to take equity stakes in local banks last winter, and
bought several large investment portfolios from the banks
this spring.
--------------
(SBU) COMMENT
--------------
-- There is no authoritative data, but various commercial
estimates indicate Qatar's residential real estate prices
have dropped about 30 percent in Doha with land prices
dropping between 40 inside, and 70 percent outside, the
capital. Bank lending to domestic real estate had all but
dried up over the past few months, and the GOQ intends this
intervention to prime more lending to the sector and across
the economy.
-- In the absence of formally declared guarantees and deposit
insurance schemes, the GOQ announcement is a loud statement
of support for the banks.
-- A credit slowdown and real estate downturn
notwithstanding, Qatar's economy is projected to grow at 10
percent in 2009, an extraordinary figure, given the severity
of the global downturn. The goernment's large role in the
economy and the strength of its balance sheets due to ramping
hydrocaron exports is the primary reason for this growth.
End Key Points andComment.
1. (U) In announcng the move, Prime Minister Hamad Bin
Jassim Al hani said the government would have a ceiling of
5 billion Qatari Riyals (USD 4.1 billion) for buyig loans
and the action is being taken "so that the banks can continue
to play their vital role in the national economy and
accelerate domestic growth."
2. (SBU) Embassy's banking sector contacts hailed the GOQ
announcement and view the intervention as helping to prevent
problems with their balance sheets down the road. It also
appears that the Qatari action was taken on the government's
initiative, and not in reaction to a clamor for help from
local banks. Details remain unclear - i.e., whether the GOQ
or institutions will decide which assets to sell to the
government.
3. (SBU) Banks' real estate portfolios have grown quickly in
recent years, though only 13 percent of total credit
facilities are allocated to real estate, based on Central
Bank figures from last year. Moreover, banks are restricted
from lending more than 15 percent of their total portfolio to
the real estate sector. A GOQ buyout of the banks' assets
would free up their books to allow more lending.
4. (U) The Doha Securities Market (DSM) responded positively
to the news, jumping almost 6 percent on Sunday.
5. (SBU) Embassy's banking contacts were less sanguine about
the state of commercial lending, which remains a problem and
the area most likely to see a rise in non-performing loans.
In recent years, many banks (and borrowers) over-extended
themselves via easy credit for personal loans.
LeBaron