Dubai: BNP Paribas and Citigroup provided about $500 million each in syndicated loans to companies owned by Saudi billionaire Maan Al Sanea and the Algosaibi family, making them the most at risk to the country's largest debt restructuring.
BNP, France's largest bank, loaned about $475 million to Saad Group and $47.5 million to A.H. Algosaibi, whose Bahraini bank unit is in default. Citigroup in New York loaned $500 million to Saad.
The banks top a list of 37 creditors that provided $5.6 billion to units of Saad Group, the construction and finance company whose owner Al Sanea has had accounts frozen, according to a document provided by one lender that shows the breakdown for the first time.
The creditors lent another $700 million to Ahmad Hamad Algosaibi & Brothers.
Banks that provided at least $64 billion to Saudi borrowers in the past five years as record oil prices spurred economic growth for the world's biggest crude exporter now risk losses because the country's first recession in a decade is threatening the wealth of some of the most powerful families.
"Uncertainty on loans to the tune of $500 million will weigh heavily" on the banks, Ali Khan, the managing director of brokerage Arqaam Capital, said. "That level of exposure is pretty significant, I don't believe the market has factored these amounts."
Citigroup had $6.5 billion of impaired corporate loans in the Europe, Middle East and Africa region as of March 31, according to the bank's financial statements. Worldwide, the bank had $10.8 billion of impaired corporate loans.
Spokespersons for BNP Paribas and Citigroup would not comment.
Al Sanea, ranked No 62 among the world's richest people by Forbes in March, with an estimated net worth of $7 billion, married into the Algosaibi family, whose businesses span banking to beverages.