By Tom Arnold
DUBAI (Reuters) - Qatar National Bank (QA:QNBK) (QNB), the largest bank in the Middle East and Africa, has put on hold plans to connect to Saudi Arabia's interbank payment network, as a regional political rift disrupts its growth plans in the kingdom, sources familiar with the matter said.
In May, the lender opened a branch in Riyadh, its first in the kingdom, offering retail and corporate banking services.
But while the branch is operational, QNB has not yet completed steps to connect to the Saudi Arabian Riyal Interbank Express (SARIE) system, which allows commercial banks in the kingdom to make and settle payments in riyals and is an important step for lenders operating there, the sources said.
They said the delay was prompted by the political rift, which led to Saudi Arabia, United Arab Emirates, Bahrain and Egypt on June 5 suspending diplomatic and transport ties with Qatar.
In a statement, a QNB spokesperson said its operations in Saudi Arabia were operating as normal. "The Kingdom of Saudi Arabia continues to be a strategic market for QNB and we still envisages that in the future the Kingdom of Saudi Arabia will be a significant opportunity for growth," it said.
Saudi Arabia's central bank, which is in charge of operating SARIE, did not respond to a Reuters request for comment.
After gaining a commercial banking license from the regulator, QNB inaugurated its Riyadh branch on May 4 in a ceremony attended by Saudi Arabia's central bank governor Ahmed al-Kholifey and QNB's chief executive Ali Ahmed al-Kuwari.
The sources said the branch had connected to the SWIFT messaging system, allowing it to make payments inside and outside of Saudi Arabia.
But SARIE is more commonly used among banks in the kingdom as it is faster and cheaper for money transfers.
At the time of the inauguration, al-Kuwari said QNB planned to apply for an investment banking license in Saudi Arabia.
In the statement, QNB said that was "still under consideration."
QNB has banking interests in two of the other countries Qatar has fallen out with. A separate banking source told Reuters that QNB's unit in Egypt was operating as normal, while a QNB spokesman said last month the lender's 40 percent stake in UAE-based Commercial Bank International was not for sale.