Qatar backs lenders as regional war threatens stability

Qatar has introduced a slew of measures to underpin its banking sector, as the war in Iran continues to stall industries, erode investor confidence and dent customer demand. 

Qatar Central Bank (QCB) will offer unlimited repurchase facilities in Qatari riyal denominations against securities held by lenders. The Central Bank will also introduce a term repo facility with three-month maturities, complementing its existing overnight repo facility.  

The new term repo facility will enable banks to manage cash flow with greater certainty during the current period, the central bank said in a statement Sunday.

Reserve requirements on deposits have been trimmed from 4.5% to 3.5%. In terms of borrowing ease, banks have been permitted to ease loan and interest payments for up to three months for customers affected by “current circumstances”, the statement added.  

The central bank directive comes weeks after the UAE’s Central Bank announced a raft of measures to boost liquidity within the local banking sector. Lenders were permitted to access reserve balances of up to 30% of the cash reserve requirement and were granted temporary relief in liquidity and stable funding ratios for greater flexibility, too.

Banks have reportedly not experienced any significant funding outflows, according to S&P Global Ratings. 

“We understand that major outflows of foreign or local funding have not yet occurred. That said, if the war persists, it’s possible there could be some flight to quality between banks within the same systems, as well as external or local funding outflows,” the report read. 

The rating agency said that the full impact on banks’ asset quality indicators will take time to materialize. 

“Overall, we expect some deterioration in banks' financial performance in 2026, the extent of which will depend on the conflict’s duration and impact on local economies.”