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Banks in the UAE have "significant" exposure to Saudi Arabia's troubled Saad Group and Algosaibi conglomerates, the UAE central bank governor said on Monday.
Speaking in the Swiss city of Basel, Sultan Bin Nasser Al Suweidi said the Saudi central bank could not keep its freeze on accounts linked to the two firms forever and that Gulf countries must find a common and transparent solution to this issue as they are all affected.
"It's a big issue everywhere. All GCC countries are exposed. (The UAE banks' exposure) is significant," Al Suweidi said, without detailing how much debt local banks owed.
According to bankers, the Saudi central bank on June 1 froze the accounts of the Saad Group chairman, Maan Al Sanea.
Al Suweidi said the issue could cast doubt on all family businesses in the region if it was unresolved.
Asked what the Saudi Arabian Monetary Agency (SAMA) could do, Al Suweidi said: "It is central to this issue. The freeze should not stay forever. It's not ring-fenced. This problem, if it stays unresolved, will throw doubt onto all family businesses across all GCC countries."
Privately-held investment company Saad Group ran into difficulties earlier in June, prompting the Saudi central bank to freeze the accounts of its billionaire chairman Al Sanea.
Another private group, Ahmad Hamad Algosaibi & Brothers Company (AHAB) is also restructuring debt.
Saad Group and the Algosaibi family borrowed at least $6.3bn in syndicated loans, Reuters LPC data shows, but it is not clear how much remains on the banks' books. (Reuters)
