Doha Bank does not see ‘big hit’ from central bank move

CEO says 89 percent of books are conventional, order unlikely to pose challenge for other banks
Doha Bank does not see ‘big hit’ from central bank move
Doha Bank CEO Seetharaman added that the bank will continue to meet its contractual obligations through its Islamic unit (ITP Images)
By Reuters
Mon 07 Feb 2011 01:05 PM

Qatar's Doha Bank does not expect a major financial impact from the central bank's decision to separate the Islamic operations of conventional lenders in the Gulf Arab state, its chief executive said on Monday.

"It's not much of a surprise, as we had signals earlier from the central bank," Raghavan Seetharaman said in an interview.

"About 89 percent of our books are conventional, so we don't see it taking a big hit."

Doha Bank will continue to meet its contractual obligations within its Islamic business and will seek clarification from the central bank when required, Seetharaman added.

The central bank issued a circular to banks, saying it "has been decided to terminate the activities of the Islamic finance services" offered by conventional banks.

Other banks affected by the directive include international lender HSBC, Qatar National Bank, Commercial Bank of Qatar, Al Ahli Commercial Bank and International Bank of Qatar.

In a statement issued on Sunday, HSBC said it is also "communicating with the Qatar Central Bank to seek clarification on this issue."

Islamic asset allocation for other commercial lenders is between 10 and 15 percent, Seetharaman added, saying the central bank's directive should not pose a challenge for the sector.

Separately, Doha Bank has put its plans for a $500m bond on hold due to a drop in the local customer deposit rate and enough liquidity in the market.

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