The surprise announcement, made public on Sunday, caused shares in Islamic banks to rise, with one, Maraf al Rayan, climbing straightaway by 10%, according to Reuters.
According to Reuters, "worries of overlap" between the two types of banking were cited as being behind the move. It said the Qatar Central Bank (QCB) "gave no direction on whether banks can apply for separate Islamic banking licenses", and quoted analysts as saying conventional banks might have to sell their Islamic units.
Qatar, which is located on a Connecticut-sized penninsula adjacent to Saudi Arabia in the Persian Gulf, has a population of around 1.63 million people.
Some sources noted that by moving to keep its Islamic banking operations separate from those of conventional banking, Qatar was following in the footsteps of Malaysia, a major Islamic finance centre.
But the order is seen as a potential blow for the prospects of non-Islamic banks in the country – and possibly elsewhere, if other central banks in countries with large Islamic finance operations follow suit.
HSBC Holdings, which has had operations in Qatar since 1954, was reported by Bloomberg to be seeking further information about the order, which A Gulf-based HSBC spokesman confirmed this, saying "we are communicating with the Qatar Central Bank to seek clarification on this issue".
HSBC’s Islamic operation, known as HSBC Amanah, was launched in 1998, and in addition to the Middle East also has operations in Asia-Pacific, Europe and the Americas. According to its website, HSBC Amanah fields "the largest Islamic financial services team of any international bank".
In a separate story, the news organisation is reporting today that Qatar Islamic Bank’s acting chief executive said his company could be interested in snapping up the Islamic banking assets of the non-Islamic banks, should they be required to dispose of them.
For more on Qatar, see the February issue of International Adviser magazine, which may be read and downloaded in pdf form here.
