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Discuss this article (1 Comments)ADCB has $609m exposure to Saad, Algosaibi
by This email address is being protected from spam bots, you need Javascript enabled to view it on Wednesday, 23 September 2009
BANK EXPOSURE: Abu Dhabi Commercial Bank says it has more than $600m exposure to Saad and Algosaibi. (ITP Images)
Abu Dhabi Commercial Bank (ADCB) has more than $600 million in exposure to two Saudi, debt-laden conglomerates, for which it will have to book additional provisions, according to the lender's global medium-term note prospectus.
ADCB holds 1,487 billion dirhams ($404.8 million) in exposure to Saad Group and 751 million dirhams ($204.5 million) to Algosaibi, according to the prospectus published on September 17.
The two Saudi family businesses are currently undergoing a massive debt restructuring that has sent shockwaves through the regional banking system.
Related: Al Sanea Scandal
"ADCB expects to establish significant additional impairment allowances in the near future with respect to its exposures to the Saad Group and the Algosaibi Group based on changes in its expectations related to recoverability of these loans," the bank said.
Separately, Al Ahli Bank of Kuwait (ABK) has started legal action against Saudi Arabian conglomerate Saad Group and its billionaire owner Maan al-Sanea, seeking $125 million in compensation, a Kuwaiti newspaper said on Wednesday.
ABK, which started the legal proceedings on Sept 15 in New York, has accused Saad Group of violating conditions related to credit facilities agreement by providing misleading information about its financial situation, al-Anbaa said in an unsourced report.
ABK officials were not available for comment.
On Thursday, two Saudi bankers told Reuters a Saudi government panel had brokered a debt restructuring deal between Saad and Saudi banks, excluding international banks.
In July, ABK said it had an exposure of less than $30 million to Saad Group. (Reuters)
READERS' COMMENTS
Disclaimer: The views expressed here by our readers are not necessarily shared by ArabianBusiness.com or its employees.
Unsecured lending practises comes back to roost!!
Posted by SR, Dubai, UAE on Wednesday 23 September 2009 at 15:34 UAE time
As a banker I was amazed to find that in the Middle East loans are frequintly given to large companies unsecured. The banks refer to it as "name lending" and it basically entials deals being done on trust alone.
No tangible security backs many of these deals (acept guarantees at most), and in most cases if the bank have to enforce their rights under these flimsy guarantees, the legal systems are questionable.
Expect more of these stories to make the headlines as this case unrafels.
Posted by SR, Dubai, UAE on Wednesday 23 September 2009 at 15:34 UAE time
As a banker I was amazed to find that in the Middle East loans are frequintly given to large companies unsecured. The banks refer to it as "name lending" and it basically entials deals being done on trust alone.
No tangible security backs many of these deals (acept guarantees at most), and in most cases if the bank have to enforce their rights under these flimsy guarantees, the legal systems are questionable.
Expect more of these stories to make the headlines as this case unrafels.
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