Business | Banking

UAE banks: $2.9b exposure to Saad, Algosaibi

Troubled Saudi groups owe money to 13 of country's banks and seven foreign bank branches

  • By Himendra Mohan Kumar, Staff Reporter
  • Published: 00:00 November 19, 2009
  • Gulf News

Abu Dhabi: The UAE Central Bank said yesterday that banks operating in the country have a combined exposure of $2.9 billion (Dh10.7 billion) to Saudi Arabia's troubled business groups — Saad and Algosaibi — and ordered the banks exposed to take specific provisions for bad loans.

"The number of lending banks to the two groups and their related banks is 20 banks, 13 national banks and 7 foreign bank branches operating in the UAE. Their funded and unfunded exposures amount to $2.9 billion," the bank said in a statement.

The Central Bank said provisions should be made by the banks as follows: exposures to Algosaibi group, funded and unfunded, at 50 per cent, exposures to Saad group, funded and unfunded, at 50 per cent, exposures to The International Banking Corporation (TIBC), funded and unfunded, at 100 per cent and exposures to Awal Bank, funded and unfunded, at 100 per cent.

The board of directors of the Central Bank decided that these provisions must be constituted on or before December 31, 2009.

"In this regard, the Central Bank will continue to gather information and communicate with other regulators and concerned parties, regarding the additional provisions, which may be required for Algosaibi and Saad groups during 2010," it said.

"Although these provisions are considered substantial, the expected profits of all banks in the UAE, after deducting such provisions, may reach Dh20 billion at the end of 2009, compared to profits of Dh26.8 billion. during 2008," the Central Bank said, adding it is "considered good under the current circumstances".

Last week, Abu Dhabi's Summary Proceedings Court ordered banks operating in the UAE to freeze assets held by Saad and its partners with immediate effect. The court ruled that the assets of Saad Trading, Contracting and Financial Services and Saad Holding as well as their partners be attached.

Their money deposited in banks operating in the UAE, assets and properties located across the UAE and a huge amount of shares they own in a number of companies listed on the local stock markets will all be frozen in favour of Abu Dhabi Commercial Bank, the court said in its ruling.

Gulf News
Retail Gold Rate
Business Editor's choice
Quick Access

  1. Markets

  2. Economy

  3. Property

  4. Aviation

Business Top Stories

  1. US Congress eyes investment in Sharjah

  2. Better bone up on your algebra

  3. Twitter to set up shop in Indonesia

  4. Virgin Australia annual net loss triples

  5. Philippines unemployment rate at 7%