Standard & Poor's (S&P) has taken various negative rating actions on Qatari banks after downgrading Qatar’s long-term sovereign credit rating to “AA-“ and placing it on CreditWatch Negative.
The Qatari banking sector is heavily reliant on external funding, which S&P identified as a source of tail event risk.
On June 8, S&P has lowered its long-term rating on Qatar National Bank (QNB), which is viewed as a government-related entity that has a very high likelihood of extraordinary support, in case of need, to “A” from “A+.”
S&P placed its long- and short-term ratings on QNB, Commercial Bank (CBQ), Doha Bank, and Qatar Islamic Bank (QIB) on CreditWatch Negative as a direct consequence of rating actions on the sovereign.
S&P’s downgrades came after Saudi Arabia, UAE, Bahrain, and Egypt severed diplomatic, trade and transport links with Qatar earlier this week.
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“Placing the rating on CreditWatch negative also reflects our view that Qatari banks' funding or liquidity profile might weaken as a result of the recent developments,” S&P said. |
The latest diplomatic crisis is expected to exacerbate the country’s external vulnerabilities and put pressure on its economic growth and fiscal metrics, S&P added.
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