International Bank of Qatar (IBQ) has sold its Al-Yusr Islamic banking retail operation to the local Barwa Bank due to new regulations that prohibit conventional banks from operating Islamic banking subsidiaries.
The sale covers two branches, automatic teller machines, Al-Yusr employees, the retail loan portfolios and customer deposits. Private banking and corporate banking portfolios are not included in the sale.
The Islamic banking operations of conventional banks has been thrown into confusion since the central bank told them they could no longer conduct Sharia-compliant banking services.
It is still unclear what Qatar National Bank, which has a 20 per cent share of the Islamic banking sector in Qatar and owns 12 branches, will do as a result of the new regulations. Foreign banks have also been affected. The UK’s HSBC operates a branch of HSBC Amanah, its Islamic banking arm, in Qatar which it opened in mid-2010.
It is expected that most banks will either convert branches to conventional banks and their customers to conventional accounts, or simply sell on their Islamic banking arms.
Banks in Qatar have until the end of the year to complete the process.