UAE tells banks to cut ties to Saudi Saad, AHAB

SAAD GROUP: UAE central bank directs local banks to stop lending to Saudi businesses Saad Group - headed-up by by billionaire Maan al-Sanea - and Ahmad Hamad Al Gosaibi Group & Brothers. (Getty Images)

Banks in the UAE have been directed by the central bank to stop lending to troubled Saudi businesses Saad Group and Ahmad Hamad Al Gosaibi Group & Brothers (AHAB), bankers said on Wednesday.

The central bank issued a circular to banks on Tuesday not to open any new facilities with the named Saudi groups until further notice, bankers in Abu Dhabi said.

"It was more of a cautionary directive," said a senior banker at Union National Bank. He added that it is unlikely that any banks or companies in the UAE would have any exposure to those groups.

"If at all, it would be minimal," he said.

Saad's woes have rattled a $30 billion empire chaired by billionaire Maan al-Sanea and represent one of the biggest defaults to hit the Gulf Arab region since the onset of the financial crisis.

The circular is a further blow to the once-proud family-owned conglomerates who have seen their credit ratings removed or slashed to default status and the accounts of some of their owners frozen by the Saudi central bank.

Another Abu Dhabi-based banker also confirmed having received the circular.

"We received the circular and we have been following what has happened to the Saudi groups. But we have no dealings with them whatsoever," he said.

Both bankers declined to be named because they are not authorised to talk to the media. (Reuters)

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READERS' COMMENTS

UAE tells banks to cut ties
Posted by karpakarajan v chettiar, abu dhabi, uae on Saturday 13 June 2009 at 16:22 UAE time


One basic attribute which distinguishes bank finance from other finances; which learned three decades ago; is that bank finances is a regulated finance;. The end use is monitored. Finance is directed mostly to productive purpose and linked to the asset. The way Banks in UAE manage credit; it is easy for the borrower to divert funds and end up into trouble for self as well as the bank. Unless Central bank comes out with more strict regulations; the greedy bankers cannot be reined.

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