Saudi and UAE banks suspend business with Qatari banks amid diplomatic crisis

Some commercial banks in Saudi Arabia and the United Arab Emirates have suspended business with Qatari banks as a result of a major diplomatic spat in the region, Reuters reported on Tuesday, citing banking sources.

The sources said that lenders were holding off doing business until they receive more guidance on the dispute from their respective central banks on how to deal with the rift.

They also said that the central bank of the UAE had asked banks in the country to provide details of their exposure to banks in Qatar and that the central bank of Bahrain had taken a similar step. They reportedly told banks that they have until Thursday to provide that information.

Reuters reported that the UAE central bank did not respond to a request for comment and Bahraini central bank officials could not immediately be contacted for comment.

Earlier this week, five Arab states – Saudi Arabia, the United Arab Emirates, Egypt, Bahrain and Yemen—said that they had cut diplomatic relations with Qatar, severed land, air and sea travel and are expelling Qatari citizens giving them 48 hours to depart.

Qatar’s main stock exchange suffered its worst day in around seven years on Monday and the country’s sovereign bonds and currency sold off dramatically too. 

The Saudis and their allies are demanding, in effect, that Qatar end its independent foreign policy and tame or shut down its Al Jazeera television station.

They say that Qatar is complicit with Iran in supporting terrorism.

Saudi Arabia and Qatar have long been rivals. Despite Qatar’s small size, its great wealth and vast gas reserves have given it significant influence in the region.

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