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Qatar banks to get cash, bonds for realty portfolio |
By Santhosh V Perumal
Business Reporter
Commercial banks in Qatar will get cash and bonds in lieu of selling their real estate portfolio - including loans and investments to government - it is learnt.
The deal, which is to be implemented by the Qatar Central Bank (QCB), involves both cash and issue of 10-year government bond carrying a fixed coupon of 6.5% annually, a measure that will free up the liquidity of banks and boost their capacity to finance development projects, according to banking sources.
The banks would have the right to repurchase the entire portfolio or any part of it, they said, adding the administrative and procedural matters concerning the real estate portfolio would rest with the banks, while the receipts from the portfolio would go to the government coffer.
Those assets taken as collateral would also qualify under the QCB mandated guidelines, the sources said.
A clear picture emerged yesterday after a meeting of bankers with QCB governor Sheikh Abdullah bin Saud al-Thani, following a government announcement on last Thursday.
“The Qatari government has decided to buy the real estate portfolios and investments that Qatari banks want to sell,” Prime Minister HE Sheikh Hamad bin Jassim bin Jabor al-Thani had said announcing the package.
The selling price (of the real estate portfolio) has been set at the net book value of such real estate loans and investments with a total ceiling amounting to QR15bn.
The move came as part of efforts to support the real estate sector, help maintain the growth of Qatari economy, and enable banks to play their vital role of pushing the development and growth to the national economy, according to Prime Minister.
The latest measure is third in line with the government already injecting capital to banks by buying 10%-20% stake and then bought local investment portfolio of the banks to prevent mark-to-market investment losses from hitting banks.
The first two measures appear to have already instilled investor confidence in the Doha Securities Market, which is up more than 5% year-to-date.
Qatar’s banking sector is the fourth largest by assets among the Gulf Co-operation Council countries, with total assets of $110bn at the end of March, according to Shuaa Capital, a Dubai-based investment bank.
Analysts say the measure is a welcome step because the banks play a key role in the economy in reviving the domestic demand.
“It (the latest measure) should not be seen in isolation but has to be seen in the macro context of the banks’ increased multiplier effect on the economy,” one of them said. |
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