UAE Banks Desperate to Sell Qatar Loans

A number of banks in the UAE are in talks with international counterparts to sell down their Qatar exposure as the Persian Gulf Arab states’ diplomatic crisis drags on without resolution.

Banking sources said it has become clear to many UAE bankers in recent weeks that Qatar’s isolation could potentially last for years, Reuters reported.

Saudi Arabia, Bahrain, Egypt and the UAE cut diplomatic and transport ties with Doha on June 5, alleging Qatar funded terrorism, something it vehemently denies.

At the time, UAE banks pulled back from new business with Qatari institutions but largely hung on to existing syndicated loans which they had extended to Qatari banks.

Some UAE banks did discuss the possibility of selling off their exposure, but very little of any actual business was done and prospective sellers were reluctant to lower the prices of the loans significantly, the sources said.

Now, however, the idea has firmed as mediation efforts have made no apparent progress. UAE minister of state for foreign affairs, Anwar Gargash, said this week that Qatar knew what it needed to do to end the dispute, so the issue was no longer a priority for the four states.

UAE banks holding Qatari loans have become “more aggressive over the past couple of weeks” in offering the loans for sale in the secondary market, said one banker at a European bank specializing in financial institutions.

Prospective sellers, including First Abu Dhabi Bank, have been in talks with a select group of potential buyers over the past two weeks to sound out their appetite for Qatari bank loans, the sources said. A spokeswoman for First Abu Dhabi declined to comment.

Qatari banks have traditionally relied heavily on external financing and raised over $10 billion through syndicated loans since early 2014, Thomson Reuters data shows. A large proportion of that total was lent by banks in the UAE.

First Abu Dhabi, the largest bank in the UAE, participated in several syndicated loans to Qatari banks over the past few years, including loans to Ahli Bank, Commercial Bank of Qatar and Qatar National Bank.

Loans to QNB, the country’s largest lender, and CBQ are among assets now being offered for sale, the sources said.

A spokesman for QNB said: “It’s a normal practice in the industry that lenders to banks through syndicated loans sell part or all of their exposure in the secondary market.”

While most Qatari loans on offer are to Qatari banks, some corporate and project finance loans are also being offered, the banker at the European institution added.