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Qatari banks' liquidity at risk after blacklist; Moody's downgrades South Africa

MIDDLE EAST AND NORTH AFRICA

* The Central Bank of the United Arab Emirates instructed local banks to freeze the assets of 59 individuals and 12 entities that were designated as terrorists or terrorist organizations by Saudi Arabia, the UAE, Egypt and Bahrain, according to WAM. The central bank said the blacklisted individuals and entities held accounts at Qatar Islamic Bank (QPSC), Qatar International Islamic Bank (QSC), Barwa Bank QSC, Masraf Al Rayan (QPSC), Qatar National Bank (QPSC) and Doha Bank QSC, and told local lenders to apply stricter due diligence for any accounts held by the six Qatari banks.

* The Central Bank of Bahrain also instructed local banks to freeze the assets and bank accounts of the same individuals and entities and asked the banks to provide any financial information concerning those on the blacklist as soon as possible, the Bahrain News Agency reported.

* The blacklist could squeeze liquidity for Qatari banks, Reuters wrote. Chiradeep Ghosh, a banking analyst at SICO Bahrain, told the newswire that Qatari lenders have some 60 billion Qatari riyals in funding in the form of customer and interbank deposits from other countries in the Gulf, adding: "It is especially challenging as they're not very liquid as their loan to deposit ratios are already above 100%."

* S&P Global Ratings, meanwhile, said Qatari banks are strong enough to cope with the withdrawal of deposits and funding by other Gulf Cooperation Council countries, saying the banks' liquidity profiles will help them absorb a moderate drop in external funding and cited the likelihood of government support in case of need.

* Kuwait, which is playing a mediating role in the Gulf crisis, said Qatar is willing to hold a dialogue to resolve the ongoing diplomatic rift in the region, the Kuwait News Agency wrote, citing Kuwaiti Foreign Minister Sabah al-Khaled al-Hamad al-Sabah. Reuters and Bloomberg News have reports.

* Oman-based United Finance Co. SAOG said its board approved engaging in talks with Alizz Islamic Bank SAOG to explore the possibility of a merger.

* The Central Bank of Oman said in a recent report that Islamic banks in the country is growing at a faster rate than conventional banks, Gulf News reported. Islamic banks held a 10.8% market share in February 2017, compared to 5.1% in 2015.

* United Cooperative Assurance Co.'s board of directors recommended an 18.4% capital cut to 400 million Saudi Arabian riyals from 490 million riyals, or to 1 share for every 5.44 shares outstanding.

* Insurance companies in Kuwait are expected to see a 30% rise in total insurance premiums this year owing to the projected growth in the medical insurance industry, Middle East Insurance Review reported.

* Saudi Arabia's health minister, Tawfiq al-Rabiah, approved a recent decision by the Council of Cooperative Health Insurance to suspend Gulf Union Cooperative Insurance Co. from issuing medical insurance policies as of June 8. The insurer was suspended for violating health insurance unified laws and regulations by overselling cooperative insurance policies.

* Arab Investment Bank looks to increase its small and medium-sized enterprises portfolio by 2018-end to 12.3 billion Egyptian pounds, corresponding to 50% of the lender's total loan portfolio, Daily News Egypt reported. Chairman Mohammed Hani Seif el-Nasr said the bank plans to inject 2 billion pounds for SME funding this year, taking the total to 5.5 billion pounds.

* The board of Export Development Bank of Egypt (SAE) approved the bank's plan to increase capital to 5 billion Egyptian pounds from 2 billion pounds, Reuters wrote. The lender said it expects its 2017-2018 full-year net profit to reach 654 million pounds.

* Egypt will resume negotiations this week with the World Bank and the African Development Bank for the disbursement of the next tranches of loans from the two creditors, Amwal Al Ghad wrote.

* The total volume of deposits at Egyptian banks dropped for the first time since September 2014, to 2.714 trillion pounds at February-end from 2.828 trillion pounds in January, Amwal Al Ghad noted.

* Jordan Commercial Bank completed a rights issue that increases its capital to 120 million shares from 112.9 million shares, Addustour wrote.

* Morocco's association of capital will mobilize a 1 billion Moroccan dirham seed fund by 2020 to finance startups, Financial Afrik reported.

EAST AND WEST AFRICA

* KCB Group Plc has submitted an expression of interest to acquire National Bank of Kenya Ltd., Daily Nation reported. Documents seen by the paper showed that KCB has proposed to acquire a minimum 70% stake in National Bank of Kenya through a share swap.

* Family Bank Ltd. has shelved plans to list on the Nairobi Securities Exchange due to the current unconducive market, Capital FM wrote. Managing Director David Thuku stressed that the bank's plans to list are still on track and that it will be waiting for an "opportune moment" to press ahead with it.

* Bank account holders in Kenya will be able to transfer money from one bank to another via their mobile phones, agents, branches, ATMs and internet banking for free in the next two months, Capital FM wrote. Kenya Bankers Association CEO Habil Olaka said the initiative is aimed at attracting more clients and banks to the PesaLink platform.

* Anthony Oppong, CEO of Ghana's Chartered Institute of Bankers, said the Ghanaian government's decision to issue new bonds to retire legacy debts could boost banks' liquidity and consequently lower their high nonperforming loan ratio, 3news wrote. The government intends to raise a 10 billion Ghanaian cedi bond.

CENTRAL AND SOUTHERN AFRICA

* Moody's downgraded South Africa's long-term issuer and senior unsecured ratings to Baa3 from Baa2 and assigned a negative outlook, citing the continued downside risks for growth and fiscal consolidation following recent political developments. The ratings action concludes the review for downgrade that commenced April 3.

* Absa Bank Ltd. has threatened to close down the bank account of South African President Jacob Zuma's wife, Tobeka Madiba-Zuma, and asked her to explain the large sums of money that passed through her account, insiders told the Sunday Times.

* South Africa's bond market will soon have a new clearing and settlement system to replace the current one which has been in place since 1991, Finextra wrote. Central securities depository Strate intends to implement its Debt Instrument Solution system July 24, replacing the current UNEXCor system.

* Lesotho Prime Minister Pakalitha Mosisili conceded defeat and resigned from his post after losing in a parliamentary election to opponent Thomas Thabane, Reuters reported. Thabane's All Basotho Convention won 48 seats in parliament, compared with 30 seats secured by Mosisili's Democratic Congress party.

* Mozambique's government praised the positive signal from Russian bank JSC VTB Bank, which is now willing to start renegotiations for controversial loans relating to state companies Ematum, Proindicus and Mozambique Asset Management, O País reported.

* Fitch Ratings assigned Development Bank of Namibia long-term foreign- and local-currency issuer default ratings of BBB- with a negative outlook, among other ratings, citing a high probability of support to the bank from the Namibian government in case of need, given the bank's strategic importance to the country as its primary development bank.

* Following a visit to Zambia, the IMF said it will decide in August whether to grant the country a $1.3 billion, three-year loan facility to help the country address a budget deficit of approximately 7%, Reuters wrote, citing Tsidi Tsikata, the fund's mission chief.

* The Bank of Central African States has seen its foreign exchange reserves fall by 55% since the start of Abbas Mahamat Tolli's tenure in February, with banks facing liquidity problems due to low oil prices, Financial Afrik wrote.

* In the Democratic Republic of the Congo, Afriland First Bank has taken over First International Bank, which has been under central bank supervision for 18 months, according to Les Dépêches de Brazzaville.

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Leo Magno, Henni Abdelghani, Pádraig Belton, and Mariana Aldano contributed to this report.

The Daily Dose Middle East and Africa has an editorial deadline of 5 a.m. London time. Some external links may require a subscription. S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.