x Abu Dhabi, UAEMonday 24 July 2017

Al Gosaibis seek deal on debt

The Saudi family seeks to broker a deal with UAE lenders over an estimated $3bn of debt.

The embattled al Gosaibi family of Saudi Arabia has sought the help of the UAE Central Bank to broker a deal with lenders in the Emirates over the estimated US$3 billion (Dh11.01bn) of debt they are owed as a result of one of the Middle East's biggest financial scandals. A meeting between family representatives and Central Bank officials took place last week as part of the Saudi family's plans for a "global" settlement of their debt problems, and was described as "very useful", according to a source familiar with the discussions. The move by the al Gosaibis represents an easing in the problems caused by their bitter dispute with Maan al Sanea, the billionaire head of Saad Group accused of defrauding them. Mashreqbank, based in Dubai, has sued Ahmad Hamad Al Gosaibi and Brothers to try to retrieve $398 million of loans to the Saudi family conglomerate. Abu Dhabi Commercial Bank, which is owed $600m, is also among the 13 UAE financial institutions listed as creditors of Al Gosaibi or Saad. At the meeting in Abu Dhabi last Sunday, the Saudis were represented by their legal advisers and by Mohammed al Gosaibi, the son of the chairman of the Al Gosaibi holding company. Central Bank officials present included Saeed al Hamiz, the senior director of banking supervision. UAE authorities have played an active role in the affair, recently directing banks in the country to reveal their exposure to the scandal. It is thought that 120 banks worldwide have a total exposure of $22bn to the Saudi groups, with $5bn of that held by Saudi financial institutions. News of the Abu Dhabi meeting seems to confirm a change of tack by the al Gosaibi family. The family has hitherto insisted that its liabilities were largely the result of Mr al Sanea's alleged fraud and launched legal actions in the UAE, Switzerland, the Cayman Islands, Britain and the US to recover their losses from Saad assets. The al Gosaibis reassured the Central Bank that UAE creditors would be fully included in any settlement negotiated with Saudi banks, sources familiar with the situation said. Proposals are likely to involve immediate payback of some of the debt, and renegotiating and rolling over the rest of the arrears. "The initial reaction was quite cold, but as soon as they [the Central Bank] heard the proposals, their tone changed completely," a source close to the talks said. The al Gosaibi family is also reported to be seeking talks with their creditors in the kingdom to reach some kind of settlement over their debts. Negotiations with Saudi financial institutions on a "global" settlement are expected to start within the next two weeks. It is unclear at this stage whether similar meetings are planned with international banks, to whom the bulk of the debts are owed. Saudi authorities have recently distanced themselves from reports that Mr al Sanea had struck a deal with Saudi banks over his multibillion-dollar liabilities to them. The meeting in Abu Dhabi is believed to have been sanctioned by the Saudi Arabia Monetary Agency (SAMA), the kingdom's top financial regulator, and agreed to by it and the UAE Central Bank. A Central Bank spokesman was unavailable for comment. Jim Courtovich, of Kearsarge Global Advisers, a Washington firm working on behalf of the al Gosaibis, said: "The family has from the beginning kept an open dialogue with all stakeholders to find a resolution to this fraud." Mohammed al Gosaibi declined to comment. A statement from Mashreqbank said: "We are aware of reports a settlement is being discussed. Since we do not know what is proposed, it is not possible for us to provide any feedback but we will examine any offer which adequately addresses our interests." fkane@thenational.ae uharnischfeger@thenational.ae additional reporting by Tom Arnold