A specialist will look into the bank's claim over a Dh542 million loan to a division of Saudi Arabia's Saad Group.
Expert brought in by Dubai judge in Mashreqbank case
A judge in Dubai yesterday appointed a specialist to look further into Mashreqbank's claims over a Dh542 million (US$147.55m) loan to a division of Saudi Arabia's Saad Group. The Saad Group first defaulted on financial obligations last summer, leading to a rash of lawsuits across the region as banks scrambled to get their money back. A $650m Islamic bond issued by Saad Trading, Contracting and Financial Services - the Saad Group division that is the subject of Mashreq's lawsuit - also defaulted late last year.
In addition to its legal wrangles with banks, the conglomerate is embroiled in a dispute with Ahmad Hamad Al Gosaibi and Brothers, another Saudi company, over an alleged $10 billion fraud. Maan al Sanea, the Saad Group's chairman, denies those allegations. The Dubai judge's decision yesterday to appoint an expert to evaluate the case was not a reflection on the merit of Mashreq's claims, the bank said in a statement. Mashreq, which is based in Dubai, is the country's fifth-largest lender by assets.
"The Dubai Commercial Court today ruled on the case of Mashreq Bank and Saad Trading in the matter of an outstanding Dh542 million loan," the bank said. "The court issued a preliminary judgment appointing an expert whose role is to review the case documentation and related accounts in order to verify and confirm the amount of the claim. This is purely a procedural step and a prerequisite for a final ruling, which we strongly believe will go our way."
A representative of the Saad Group did not respond to a request for comment. It was unclear yesterday when the court hearings would resume and when a final verdict could be expected. The troubles at the Saad and Al Gosaibi groups have rippled through the UAE's banking system in the past year as lenders set aside cash aggressively as a buffer against defaults. Banks were told by the Central Bank to make provisions equalling 50 per cent of their exposures to Al Gosaibi and 75 per cent of their exposures to the Saad Group last year.
During that period, provisions for non-performing loans rose by Dh12.9bn, according to Central Bank statistics. The country's banks were estimated last year to have about $3bn of exposure to the groups. Mashreq recently reported first-quarter profits of Dh251m, down by 48 per cent from a year earlier. It booked Dh484m of provisions for the period. email@example.com