Qatar launched new measures to support its banking sector on Monday with a government plan to buy banks' investment portfolios in a bid to revive lending and support the economy, sending financial shares soaring. "The government is studying a system to take these shares from banks, which will help increase lending," Qatari Prime Minister Sheikh Hamad bin Jassem al-Thani said, according to the state-run Qatar News Agency.
The emergency measure, the second in Qatar, underscores how the global financial crisis has smashed hopes that the energy-exporting Gulf Arab region would escape due to its petroleum revenues and massive sovereign savings.
Even Qatar, the one bright spot due to massive exports of liquefied natural gas and growth expectations of around 10 percent in 2009, has not escaped the liquidity crunch, with some bank shares falling around 70 percent in the last 12 months. Qatar bank shares leapt over 9 percent, driving the Doha bourse up 8.85 percent, its biggest gain since October 14.
"This is great news for the markets," said Haissam Arabi, chief executive of Gulfmena Alternative Investments, a regional specialist hedge fund company. "By taking away the investment portfolios of the banks, the banks do not have to provision for any losses and can take it away from their books. It boosts their solvency and supports them."
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