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Gulf Banks to Cut Qatar Exposure as Wider Sanctions Seen

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  • Gulf Banks to Cut Qatar Exposure as Wider Sanctions Seen

Some banks in Saudi Arabia, the United Arab Emirates and Bahrain are cutting their exposure to Qatar amid concerns of a widening of the blockade on the gas-rich Gulf state, people familiar with the matter said.

Some lenders in these countries have started withdrawing deposits from Qatari banks and stopped trading riyals and bonds, the people said, asking not to be identified because the matter is private. One possibility of the deepening of measures against Qatar could be the imposition of financial sanctions, the people said.

Tensions between Qatar, one of the world’s richest countries and the biggest producer of liquefied natural gas, and its neighbors are escalating after Saudi Arabia, Bahrain, Egypt and the U.A.E. on Monday broke diplomatic relations and closed transport routes. The unprecedented move aimed to punish Qatar for ties with Iran and Islamist groups in the region.

Other banks are monitoring developments between the countries and haven’t liquidated their holdings in Qatar yet, two other people said. These lenders will decide whether to extend or withdraw deposits and other facilities when they mature, they said.

‘Foreign Funding’

U.A.E. Minister of State for Foreign Affairs Anwar Gargash on Wednesday said he hopes there wouldn’t be a need for further sanctions, but the allies were “ready for it” if necessary. Qatar is in a state of “denial” over its isolation, and will have to change its policies for any mediation effort to be successful, he said in an interview.

“The broadening of financial sanctions could have ramifications as the leading Qatari banks such as Qatar National Bank rely heavily on foreign funding, which could cool down its credit boom,” Arqaam Capital Ltd. analysts Jaap Meijer and Michael Malkoun said in a June 6 report. “However, only 4 percent of QNB’s deposits come from the four countries, excluding QNB Egypt, which is a stand alone operation.”

Residents of the U.A.E. who express support or sympathy for Qatar on social media could face a jail term of up to 15 years, Attorney General Hamad Saif Al Shamsi said in a statement carried by Al Bayan and other local newspapers. The penalties come under the U.A.E.’s strict cybercrime law, introduced in 2012, which stipulates punishments for online acts from defamation to harming national unity.

Central banks in Saudi Arabia, the U.A.E. and Bahrain asked lenders to reveal their exposure to Qatari clients, people familiar with the matter said on Tuesday. Banks have been asked to share information on inflows and outflows, as well as details on equity, bonds, swaps, interbank funds and custody operations.

“Companies and banks will need to think one step ahead, as we saw in the case of sanctions between Russia and Turkey,” said Simon Quijano-Evans, an emerging-market strategist at London-based Legal & General Investment Management Ltd., which oversees about $1.2 trillion of assets. “There is always a kick-back effect that is difficult to foresee but judging by the speed of events, counter-parties in the whole of GCC will need to adapt quickly.”

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Government

Senate Suspends Senator Abdul Ningi for 3 Months Over Budget Padding Allegations

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The Senate has announced the suspension of Senator Abdul Ningi for three months following his allegations of budget padding to the tune of N3.7 trillion in the 2024 budget.

Ningi, who represents Bauchi Central and chairs the Senate Committee on Population, had made the claims in a recent interview with the Hausa service of the BBC.

During a plenary session, Senator Olamilekan Adeola, the Chairman of the Senate Committee on Appropriations, raised a motion to address Ningi’s allegations, citing the urgent need to address what he termed as “false allegations.”

The transcript of Ningi’s interview was read on the Senate floor, prompting deliberation on the appropriate action to take.

Initially, Senator Jimoh Ibrahim proposed a 12-month suspension for Ningi, but Senator Chris Ekpeyong moved to reduce it to six months.

Eventually, Senator Garba Maidoki amended the motion further, suggesting a three-month suspension.

The amended motion was put to a voice vote, and Senate President Godswill Akpabio announced the decision to suspend Ningi for three months.

Following the ruling, Ningi was escorted out of the Senate chamber by the Sergeants-at-arms.

The suspension comes amidst division within the Senate over Ningi’s claims, with some senators disowning his allegations and calling for a thorough investigation.

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Government

Ekiti Governor Unveils Multi-Billion Naira Relief Programmes Amid Economic Crisis

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Biodun Oyebanji

Ekiti State Governor, Mr. Biodun Abayomi Oyebanji, has announced a comprehensive relief package aimed at alleviating the hardship faced by the people of the state.

The relief programs encompass various sectors to cushion the impact of the economic downturn.

One of the key initiatives entails clearing salary arrears amounting to over N2.7 billion owed to both State and Local Government workers.

This move signifies the government’s commitment to addressing the financial burdens faced by its workforce.

Furthermore, Governor Oyebanji has approved a substantial increase of N600 million per month in the subvention of autonomous institutions, including the Judiciary and tertiary institutions.

This augmentation is intended to enable these institutions to implement wage awards in alignment with State and Local Government workers’ salaries.

In addition to addressing salary arrears, the relief programs extend to pensioners, with the approval of payments totaling N1.5 billion for two months’ pension arrears.

Moreover, an increase in the monthly gratuity payment to state pensioners and local government pensioners will provide additional financial support, totaling N200 million monthly.

The relief initiatives also encompass agricultural and small-scale business sectors.

The allocation of funds for food production and livestock transformation projects underscores the government’s commitment to enhancing food security and economic sustainability at the grassroots level.

Governor Oyebanji emphasized that these relief programs are part of the state’s concerted efforts to mitigate the adverse effects of the economic downturn and foster shared prosperity.

The comprehensive nature of the initiatives reflects a proactive approach towards addressing the challenges faced by Ekiti State residents.

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President Tinubu Orders Immediate Settlement of N342m Electricity Bill for Presidential Villa

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President Bola Tinubu has directed the prompt settlement of a N342 million outstanding electricity bill owed by the Presidential Villa to the Abuja Electricity Distribution Company (AEDC).

This move comes in response to the reconciliation of accounts between the State House Management and the AEDC.

The AEDC had earlier threatened to disconnect electricity services to the Presidential Villa and 86 Federal Government Ministries, Departments, and Agencies (MDAs) over a total outstanding debt of N47.20 billion as of December 2023.

Contrary to the initial claim by the AEDC that the State House owed N923 million in electricity bills, the Presidency clarified that the actual outstanding amount is N342.35 million.

This discrepancy underscores the importance of accurate accounting and reconciliation between entities.

In a statement signed by President Tinubu’s Special Adviser on Information and Strategy, Bayo Onanuga, the Presidency affirmed the commitment to settle the debt promptly.

Chief of Staff Femi Gbajabiamila assured that the debt would be paid to the AEDC before the end of the week.

The directive from the Presidency extends beyond the State House, as Gbajabiamila urged other MDAs to reconcile their accounts with the AEDC and settle their outstanding electricity bills.

The AEDC, on its part, issued a 10-day notice to the affected government agencies to settle their debts or face disconnection.

This development highlights the importance of financial accountability and responsible management of public utilities.

It also underscores the necessity for government entities to fulfill their financial obligations to service providers promptly, ensuring uninterrupted services and avoiding potential disruptions.

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