First Abu Dhabi Bank (FAB) on Wednesday announced that it will close Qatar operations following baseless allegations by Qatari regulatory authorities to manipulate the riyal.
In a statement, the UAE’s largest lender said it has notified the Qatar Financial Centre Regulatory Authority (QFCRA) that it will relinquish its Qatar Financial Centre (QFC) branch licence and permanently close the branch.
“FAB’s decision to close its QFC branch follows many months of baseless actions by the QFCRA that have made it impossible for FAB’s operations to continue in Qatar,” the statement said.
The QFCRA alleges FAB conducted transactions intended to manipulate the Qatari riyal. These allegations are entirely false and FAB unequivocally denies them. FAB conducts its business in accordance with the highest professional standards and in full compliance with the laws and regulations of all the jurisdictions in which it operates.
Earlier this month, QFCRA said it was prohibiting FAB from undertaking any new business for customers of its Doha branch. It has barred Abu Dhabi-based bank from providing services for new customers since March but had allowed the bank to continue working with existing customers.
FAB launched its Qatar operations in November 2008 with a QFC branch, which was upgraded in April 2011 to provide full-fledged wholesale banking business.
“FAB made good faith efforts to engage with the QFCRA to resolve the matter, with FAB’s QFC branch providing all relevant and responsive information that it was required to disclose pursuant to QFC law.
“Despite FAB’s attempts to resolve matters with the QFCRA, it is clear that no solution is attainable. Consequently, FAB has been left with no option but to make a business decision to close its QFC branch,” the Abu Dhabi-based lender said.
Saudi Arabia, the UAE, Bahrain and Egypt started a trade and diplomatic boycott of Qatar in June 2017, accusing it of supporting terrorism, a charge Doha denies.
Qatar keeps its currency pegged at a fixed rate to the US dollar, but noticed decline in currency value than its usual rate in offshore markets just after the dispute began.
Atik Munshi, senior partner at Crowe, said it is sad that the political discord between the countries is taking an undue toll on the financial sector as well.
“Qatar seems to have fallen prey to political bias rather than objectively and fairly assess and evaluate the reality. We hope that better sense prevails in all such matters,” Munshi told Khaleej Times on Saturday.
He said discontinued operations in Qatar is not expected to have any significant effect on FAB operations.
“Treating FAB QFC branch’s customers fairly is of paramount importance; FAB will safeguard the rights and interests of such customers by effecting an orderly wind-down of the QFC branch’s operations. FAB has already put in place appropriate measures to protect all of its QFC branch employees and customers,” according to the FAB statement.
“The QFCRA’s actions have no impact outside of FAB’s Qatar branch, which contributed less than 0.03 per cent of FAB’s full year 2018 net profit, and relinquishing the QFC branch licence is not expected to have any material impact on future Group performance or strategy,” the statement said.
FAB shares rose 0.95 per cent to Dh14.82 in broadly positive Abu Dhabi market, which closed 1.27 per cent up on Wednesday.