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Abu Dhabi informally boycotts western banks with big Qatari investors

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08/10/2017 | 01:14 pm

Abu Dhabi has launched an informal boycott of western banks with significant Qatari shareholders, broadening the impact of the Arab quartet’s two-month embargo against the gas-rich state. Officials have told bankers that lenders such as Credit Suisse, Deutsche Bank and Barclays are unlikely to win significant mandates in the capital of the UAE in the coming months because of large shareholdings held by Qatar’s sovereign wealth fund and members of the ruling family. Saudi Arabia, the UAE, Egypt and Bahrain launched an economic embargo on June 5, accusing the gas-rich state of supporting terrorism, claims denied by Doha. Some quartet officials have suggested that sanctions could be extended to companies doing business with Qatar, although western officials say they have warned their allies against imposing more expansive restrictions. “We have been told there is an informal boycott, there is nothing we can do,” said one banker. “There is no public blacklisting, but behind-the-scenes skulduggery.” There will be no public acknowledgment of the boycott, another banker working closely with the Abu Dhabi authorities confirmed. Another banker from one affected lender said the boycott was being carried out on an ad hoc basis by individual officials, with various entities approaching the issue differently. His bank continues to be invited for mandates from other Abu Dhabi government-related companies, he said. Barclays, Credit Suisse and Deutsche declined to comment. Abu Dhabi officials also declined to comment. The informal boycott is an alarming development for financial institutions with Qatari stakes, potentially limiting business opportunities in Gulf states with large mandates coming up as they seek to diversify their oil-dependent economies. The move deepens the level of pressure imposed on the gas-rich state. As well as the formal air- and sea-embargo, banks in Saudi Arabia and the UAE have been withdrawing billions of dollars of deposits held at Qatari institutions. The boycott came to light during Abu Dhabi National Oil Company’s awarding of mandates to handle the initial public offering of the state oil company’s retail arm in July. Affected banks such as Credit Suisse, who had been invited to pitch for the work, were eliminated quickly, the bankers said. Others were not invited to pitch, they added. ADNOC has shown a similar attitude in its approach to picking banks for its upcoming syndicated loan of up to $5bn, one of the bankers added. Barclays did not pitch for the ADNOC IPO deal, people familiar with the matter said. The lender has had a troubled relationship with Qatar in recent months, because of UK fraud charges against the British bank relating to its fundraising cash calls from the Gulf state during the 2008 financial crisis. These people believe that these factors have distanced the bank from Qatar, reducing the potential for reputational risk in the four states imposing the embargo. Its competitors say Barclays’ profile has receded over the past few years as it downsized its regional presence. Qatari entities own about 6 per cent of Barclays. About 5 per cent of Credit Suisse is owned by the Qatar Investment Authority’s direct investment arm, which has purchase rights for a further 13 per cent. Qataris hold around 6 per cent of Deutsche Bank. Abu Dhabi also has a significant programme of fundraising, IPOs and mergers that is encouraging bankers after years of moribund activity since the oil price collapse of 2014. As well as its retail arm, ADNOC is planning to spin off some of its other services businesses to boost profitability. Other state-related entities, such as industrial conglomerate Senaat, the emirate’s ports company and Emirates Global Aluminium, a significant aluminium producer, are also considering listings. Saudi Arabia, another member of the quartet, is a larger market than Abu Dhabi and has an even more ambitious reform programme, including the part-privatisation of state oil group Saudi Aramco in what is planned to be the world’s biggest IPO. But bankers say there is as yet no evidence that the kingdom intends to impose any boycott on lenders with Qatari shareholdings. Source : FT

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