By Tom Freke
Europe's banks are examining ways to reclaim funds from Saudi Arabia's Saad Group.
Europe's banks are examining ways to reclaim funds from Saudi Arabia's Saad Group, and may take control of its Swiss subsidiary, Saad Investments, a source familiar with the situation said on Friday.
"Lenders are looking at their options, and this may include a claim on Saad's Swiss operations," the source told Reuters.
Banks from outside the Gulf, including BNP Paribas and Citi, are owed a total of more than $6bn by Saad Group, which ran into difficulties in June.
Saad Group is split between a number of businesses, spread across Saudi Arabia, Bahrain, Cayman Islands and Switzerland.
The Geneva-headquarted business, Saad Investments Company Ltd (SICL), holds many of Saad's offshore investments and is registered in the Cayman Islands.
"SICL is seen to be a bit cleaner than the other parts of Saad, and its assets easier to monetise," the source said.
SICL had assets of $9.1 billion at the end of 2008, according to rating agency Moody's. These include Saad's stake in HSBC bought in 2007, the source said.
For the curious it is instructive to read back about the collapse of BCCI in the early nineties, because so many of the same questions were asked about the bank then as are being asked about SAAD now. An almost complete failure of regulation, or an evasion of regulation, seems common. BCCI set the image of the free-wheeling Gulf markets back decades, something SAAD is in danger of doing once more. Too many handshakes and too little due diligence seem in play here.