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Sun 22 Mar 2009 06:17 PM

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Qatar bank sells 100% of equities portfolio to gov't

Deal will see the gov't pay Commercial Bank of Qatar $258m for its Qatari equities.

The Commercial Bank of Qatar has sold its entire portfolio of Qatari equities to the government in a $258m deal, as part of an official plan to bolster banks through the financial crisis.

The government will pay QR417.8m ($114.8m) in cash and provide a five-year bond worth QR520.1m with a coupon of 5.5 percent, the bank said in a statement.

The equities had a net book value of QR937.9m ($257.8m) on Feb. 28, said the lender, Qatar's third largest by market value.

"The bank has the right to repurchase the entire portfolio, or any part of it, after a 12-month period from the date of sale and within a maximum period of five years at the original sale price," it said.

Commercial Bank shares were one of the biggest gainers on the Doha bourse on Sunday, rallying 4.09 percent compared to a 2.55 percent gain for the index overall.

The announcement comes after the Qatar central bank said on Friday that the government had bought QR6.5bn worth of banks' investments as part of the plan.

On March 10, the Gulf Arab oil and gas exporter said it would ask its sovereign wealth fund to buy the portfolios in order to provide liquidity to facilitate lending, causing bank shares to surge.

Several Gulf Arab countries have devised policies to limit the impact of the global financial crisis on their economies which have so far been buffered by savings from a six-year oil price boom.

Qatar said in October it would buy between 10 and 20 percent of listed banks' capital to boost investor confidence in a $5.3bn programme through the wealth fund. (Reuters)

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