More Gulf banks reveal Saudi exposure
Two more regional banks have an exposure of $136 million (Dh499m) to the two troubled Saudi groups – Saad and Ahmad Hamad Algosaibi & Brothers.
National Bank of Oman, the country's second-biggest bank by assets, said it has an exposure of RO6.5m (Dh62.6m) to The International Banking Corp and Awal Bank, both of which are part of the two groups.
"It is difficult at this stage to confirm any timelines, provisions if any we might have to take," the bank said yesterday in a statement to the Muscat bourse.
Saad Group, owned by Maan Al Sanea, the Saudi billionaire who holds a stake in HSBC Holdings, has said it is restructuring debt because of tighter credit markets. Algosaibi, whose Bahrain-based The International Banking Corp defaulted last month, said on June 11 it found "substantial irregularities" at its financial services unit.
BankMuscat, Oman's biggest bank, said on June 11 Saad and Algosaibi owed the lender and its unit in Bahrain a combined RO66m. Bank Dhofar, Oman's third-largest bank, also loaned about RO4m to Algosaibi, according to a document obtained by Bloomberg News.
The International Banking Corp was downgraded to selective default by Standard & Poor's in May. Now there is concern that the next payment of a $700m loan facility arranged by BNP Paribas and Germany's WestLB AG in May 2007 may not be met, Middle East Economic Digest reported earlier this month. The payment is due in November this year.
On June 15, Omani Central Bank Governor Hamud bin Sangur Hashim Al Zadjali said banks in other Gulf countries may be more affected by the default of Saad and Algosaibi than those in Oman. National Bank of Oman reported a 33 per cent decline in first-quarter profit after operating expenses increased.
Kuwait's Al Qabas daily said that Commercial Bank of Kuwait (CBK) gave about $119m in loans to Saad Group. CBK has taken more than 100 per cent guarantees for loans worth $50m given to Saad Group, and another loan worth about KD20m (Dh254m), it said citing an unidentified source at CBK as saying.
CBK's Chairman Abdulmajeed Al Shatti declined to comment. "This is a privileged client relation, the bank has a policy not to comment on this," he said.
Banks in Saudi Arabia and Kuwait with their commercial ties to the groups as well as banks in Bahrain, a regional banking centre closely integrated with Saudi Arabia, are thought to have the most exposure to Saad Group.
Saad Group, a $30bn empire, is restructuring its debt. Earlier this month, the Saudi central bank froze the accounts of Al Sanea.
In addition, Algosaibi is restructuring an unspecified amount of debt. Troubles at both companies have rocked investor confidence and raised questions about the regulation and transparency of Saudi Arabia's opaque financial markets.
Kuwait Finance House (KFH), the country's biggest Islamic lender, said on June 9 it has minimal exposure to the two troubled Saudi companies.
NBAD's exposure 'negligible'
National Bank of Abu Dhabi (NBAD) has "negligible" exposure to two troubled Saudi conglomerates, it said yesterday.
"Our exposure is negligible," a bank spokesman said when asked about its business with Saad Group and Ahmad Hamad Algosaibi Group & Brothers.
Abu Dhabi's largest lender by market value was not exposed to Bahrain-based The International Banking Corporation, a unit of Algosaibi, the spokesman added.
Analysts expect a new round of write-downs in the coming financial quarter for the Gulf banks, a result of their exposure to the two major Saudi companies. (Reuters)
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