A unit of Qatar's Doha Bank may be attempting to sell letters of credit (L/Cs) exposed to UAE local lenders amid continuing tensions in the Gulf.

Qatar is facing fierce criticism and increasing isolation from Saudi Arabia, the UAE, Bahrain and Egypt for Doha's alleged support for terrorism and its controversial Al Jazeera news operations, and banking relationships are under strain.

Cutting exposure

Reuters is now reporting that a unit of Doha Bank is seeking to sell some of its assets in the UAE.

Two banking sources told the news agency the bank was doing this to cut exposure to the Gulf's main financial and wealth centre.

L/C delays

The severing of diplomatic and transport links with Qatar by the Saudi-led bloc has already caused banks in Saudi Arabia, the UAE and Bahrain to reduce exposure to Qatar by taking steps such as delaying L/Cs and other investment deals.

Doha Bank was one of six named by the UAE central bank in a circular cautioning financial institutions to conduct enhanced due diligence on transactions with the Qatari banks.

The central bank has also asked UAE banks and financial institutions to stop dealing with 18 more individuals and entities with alleged links to Qatar.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.