Unintended consequences in Qatar

When the Qatar Central Bank announced that Islamic windows would have to be closed by the end of 2011, the initial reaction in the markets was that it represented a positive for Islamic banks and a negative for conventional banks with Islamic windows.  Recently HSBC, which had an Islamic window through its HSBC Amanah operations, announced that it had converted its Islamic branches to conventional branches with customers given the choice of converting their accounts or closing them.

While many of the customers of HSBC Amanah likely closed their accounts and moved to an Islamic bank, there are likely some who didn't want to go through the trouble and converted to conventional bank accounts.  When an industry like Islamic finance is trying to attract customers--particularly those who consider price and quality when deciding whether to bank with an Islamic bank or a conventional one--pushing some back to conventional banking is probably not the best strategy.  Perhaps this will turn out to be one of the unintended consequences of the Qatar Central Bank's decision.