Qatar Central Bank ‘may miss 100% loan-to-deposit’ deadline

Qatar Economic Outlook says compliance deadline may be pushed back a year to 2018
Qatar Central Bank ‘may miss 100% loan-to-deposit’ deadline
By Staff writer
Mon 20 Jun 2016 01:13 PM

Qatar Central Bank (QCB) may be forced to postpone its deadline for compliance to a 100 percent loan-to-deposit ratio until the end of 2018 due to liquidity issues, according to an official report.

The Ministry of Development Planning and Statistics (MDPS)’s Qatar Economic Outlook 2016-2018, published earlier this week, downgraded growth forecasts for this year to 3.8 percent from 4.3 percent.

It said that liquidity in the Qatari banking system has tightened due to decreased inflows of oil and gas revenues, and that the central bank might take steps to reduce pressure on liquidity.

In 2014, the central bank announced a new loan-to-deposit requirement for banks of 100 percent by the end of 2017. The deposit side of the ratio includes only customer deposits and not long-term wholesale funds, which have recently been the primary source of funding.

However, the ministry’s report said that banks are negotiating with regulators to change the loan-to-deposit formula to include long-term wholesale funds.

It said the deadline for compliance may be postponed from next year until the end of 2018 because of the broader liquidity issues in Qatar’s banking system.

The report stated, according to Gulf Times: “The deadline for compliance may be postponed until end-2018, given liquidity issues faced by Qatar’s banks.”

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