Qatar: Conventional banks asked to shut Islamic branches

Feb 05, 2011 12:00 AM

Qatar's banking regulator has asked conventional banks in the country to close down their Islamic banking branches by the end of 2011.
Circulars issued by the Qatar Central Bank (QCB) to the concerned banking entities say they have enough time on their hands to wind up their Shariah compliant banking activities, Al Sharq has reported.
Unnamed sources in the QCB said the step was being taken since in the regulator's view commercial banks are 'mixing up' Islamic and conventional banking activities. There is a mess, the source said.

He added that the customers of the branches targeted for closure would not be affected as their accounts would be transferred to Islamic banks. Al Sharq named the banks that have been notified to close their Islamic banking branches include QNB, Commercial Bank of Qatar, Doha Bank, IBQ, HSBC, Ahli Bank and Alkhaliji. These banks have some 16 branches entirely devoted to Shariah compliant banking which have a customer of around 70,000 to 80,000 and at least 88 % of the staff manning these branches are nationals.

The Islamic banking branches of conventional banks have huge deposits. However, their exposures to individuals and corporate sector are not known and it is also not known what would happen to long-term exposures of these branches.

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