February 7, 2011 / 7:50 AM / 10 years ago

UPDATE 1-Doha Bank does not see "big hit" from c.bank move

* CEO says 89 pct of books are conventional

* Order unlikely to pose challenge for other banks

* Bank to seek clarification from central bank if required

* Delays planned $500 mln bond sale

(Adds details, quotes, share price)

DOHA, Feb 7 (Reuters) - Qatar’s Doha Bank (DOBK.QA) does not expect a major financial impact from the central bank’s decision to separate the Islamic operations of conventional lenders in the Gulf Arab state, its chief executive said on Monday.

“It’s not much of a surprise, as we had signals earlier from the central bank,” Raghavan Seetharaman said in an interview.

“About 89 percent of our books are conventional, so we don’t see it taking a big hit.”

Doha Bank will continue to meet its contractual obligations within its Islamic business and will seek clarification from the central bank when required, Seetharaman added.

The central bank issued a circular to banks, saying it “has been decided to terminate the activities of the Islamic finance services” offered by conventional banks.[ID:nLDE71503A]

Other Banks effected by the directive include international lender HSBC (HSBA.L), Qatar National Bank (QNBK.QA), Commercial Bank of Qatar (COMB.QA), Al Ahli Commercial Bank AABQ.QA and International Bank of Qatar.

In a statement issued on Sunday, HSBC said it is also “communicating with the Qatar Central Bank to seek clarification on this issue.”

Islamic asset allocation for other commercial lenders is between 10 and 15 percent, Seetharaman added, saying the central bank’s directive should not pose a challenge for the sector.

Separately, Doha Bank has put its plans for a $500 million bond on hold due to a drop in the local customer deposit rate and enough liquidity in the market.

Doha Bank shares were trading down 1 percent at 0735 GMT. Qatari conventional bank stocks fell on Sunday after the central bank’s decision. (Reporting by Regan Doherty; Writing by Shaheen Pasha; Editing by Dinesh Nair)

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