x Abu Dhabi, UAETuesday 25 July 2017

BNP Paribas and Citi top creditors to Saudi firms

BNP Paribas and Citigroup provide 16% $6.3bn of syndicated loans owed by the billionaire Maan al Sanea and the Al Gosaibi family.

DUBAI // BNP Paribas and Citigroup provided 16 per cent of the US$6.3 billion (Dh23.13bn) of syndicated loans owed by the billionaire Maan al Sanea and the Al Gosaibi family, making them the most exposed to Saudi Arabia's largest debt restructuring. The banks top a list of 37 creditors that provided $5.6bn to units of Saad Group, according to a document provided by one lender that shows the breakdown for the first time. Mr al Sanea, the founder and chairman of the construction and finance company, has had his accounts frozen.

BNP, France's largest bank, loaned about $475 million to the Saad Group and $47.5m to Ahmad Hamad Al Gosaibi and Brothers (AHAB), whose bank unit is in default. Citigroup in New York loaned $500m to Saad. Banks that provided at least $64bn to Saudi borrowers in the past five years as record oil prices spurred growth for the world's biggest crude exporter now risk losses because the global slowdown is threatening the wealth of some of the most powerful families.

Mr al Sanea, ranked at 62 among the world's richest people by Forbes magazine in March with an estimated net worth of $7bn, married into the Al Gosaibi family, whose businesses span industries from banking to beverages. "Uncertainty on loans to the tune of $500m will weigh heavily" on the banks, said Ali Khan, the managing director of Arqaam Capital, based in Dubai. "That level of exposure is pretty significant, I don't believe the market has factored these amounts."

Lubna Forzley, a spokeswoman for BNP Paribas in Bahrain, declined to discuss details of the loans, citing client confidentiality. A spokesman in London for Citigroup also would not comment. Saad has borrowed at least $5.5bn from international lenders since 2007, according to data compiled by Bloomberg that does not break down the portions allocated by each bank. Al Gosaibi received $700m, the data show.

Saad Group said on June 2 it was restructuring because of "a short-term liquidity squeeze". The announcement came five days after the Saudi central bank ordered lenders in the kingdom to freeze Mr al Sanea's accounts, people familiar with the instructions said at the time. The company had more than $30bn of assets at the end of last year, according to a Moody's Investors Service report on June 2.

Saad did not respond to calls and e-mails. The Saudi Arabian Monetary Agency in Riyadh declined to comment. Al Gosaibi said last month it found "substantial irregularities" at its Bahrain-based unit, The International Banking Corporation, and would reschedule debt. Al Gosaibi "is currently carrying out an in-depth review and assessment of each division by its management and external financial and legal advisers," the company in Al Khobar said in an e-mailed statement. The Arab Bank in Amman, Jordan is the third-largest creditor on the list, having loaned $250m to the Saad Group and $40m to Al Gosaibi.

The Samba Financial Group is owed $300m by the Saad Group. Fortis Bank in Brussels loaned $250m to Saad and HSBC provided $200m. Representatives from Samba, Fortis Bank and HSBC declined to comment. The Arab Bank did not respond. Abu Dhabi Commercial Bank also has undisclosed exposure to the Saudi groups. "The majority of ADCB exposure is covered by cash deposits held with the bank," said Ala'a Eraiqat, the chief executive. "We are in close contact with the Saad and Al Gosaibi groups and working with their financial advisors and the rest of the lenders for a speedy solution."

* Bloomberg