London-listed Finablr had a market of $95m when it was halted from trading, down from a peak of $1.8bn in December
UAE Exchange, set up by the founder of embattled NMC Health Plc, defaulted on about $300 million of foreign-exchange loans, dragging some of Wall Street’s top banks into the widening scandal, according to people familiar with the matter.
Lenders including Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Commercial Bank of Dubai PSC arranged the facility, the people said, asking not to be identified because the matter is private. The borrowings haven’t been repaid due the mounting problems surrounding UAE Exchange’s owner Finablr Plc, the people said.
The United Arab Emirates central bank this month said it is overseeing UAE Exchange’s operations as Finablr, which also owns Travelex Holdings Ltd., prepares for potential insolvency. London-listed Finablr has warned that its board couldn’t accurately assess its financial situation and its chief executive officer has stepped down.
A representative for Finablr referred queries to the UAE central bank, which didn’t respond to emailed queries. Representatives for Barclays, Goldman Sachs and JPMorgan declined to comment, while representatives for Commercial Bank of Dubai and Shetty didn’t immediately respond to requests for comment.
The foreign exchange facility - known as a split value deal - is a frequent transaction for currency houses. Under the agreement, banks extend credit in one currency, which the exchange house usually repays in another currency days later. Such transactions are usually considered to be low risk and defaults are rare, the people said.
UAE Exchange was founded by Bavaguthu Raghuram Shetty in 1980 and became one of the largest remittance houses in the Middle East by mainly catering to Indian expatriate workers in the Gulf.
Finablr had a market of 77 million pounds ($95 million) when it was halted from trading, down from a peak of 1.5 billion pounds in December. Its stock has been hit after NMC was targeted by short seller Muddy Waters and later found evidence of suspected fraud.