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- Dubai 05:26 06:44 12:11 15:09 17:32 18:50
Qatar launched new measures to support its banking sector yesterday with a government plan to buy banks' investment portfolios in a bid to revive lending and support the economy, sending financial shares soaring.
"The government is studying a system to take these shares from banks, which will help increase lending," Qatari Prime Minister Sheikh Hamad bin Jassem Al Thani said, according to the state-run Qatar News Agency.
The emergency measure underscores how the global financial crisis has smashed hopes that the energy-exporting Gulf region would escape due to its petroleum revenues and massive sovereign savings.
Even Qatar, the one bright spot due to massive exports of liquefied natural gas and growth expectations of around 10 per cent in 2009, has not escaped the liquidity crunch, with some bank shares falling around 70 per cent in the last 12 months.
Qatar bank shares leapt around 10 per cent, the daily limit allowed by the Doha bourse, in reaction to the latest news.
"This is great news for the markets," said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a regional specialist hedge fund company.
"By taking away the investment portfolios of the banks, the banks do not have to provision for any losses and can take it away from their books. It boosts their solvency and supports them." Banks included in the plan are Qatar National Bank, Commercial Bank, Doha Bank, Qatar Islamic Bank, Qatar International Islamic Ban, Ahli Bank, and Al Khalij Commercial Bank, according to a government statement issued by the Doha bourse.
The share purchase process will be completed before the end of March in co-ordination with Qatar Central Bank, the government statement said.
It said the price of the investments purchased would be defined according to the cost of the portfolio registered in the banks records on February 28, 2009 minus allocations accumulated by the end of December 31, 2008.
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