Dubai: Abu Dhabi Commercial Bank hired Lazard Ltd. to advise on its exposure to NMC Health Plc and Finablr Plc, as the companies’ financial troubles mount, people familiar with the matter said.
The boutique bank will help recover some of the funds the state-owned lender provided to the struggling hospital operator and financial services firm, one of the people said, asking not to be identified because the matter is private.
Abu Dhabi Commercial Bank is currently seen as one of the biggest creditors to NMC with more than $1 billion of exposure, people with knowledge of the matter said on Tuesday. It’s also a lender to payments firm Finablr, which is linked to NMC through its founder and cross-ownership, the people said.
Representatives for Lazard and ADCB declined to comment.
Abu Dhabi Commercial Bank’s potential $1 billion exposure could wipe out 80% of the lender’s estimated profit for 2020 in a worst-case scenario, Citigroup Inc. analysts Rahul Bajaj and Ronit Ghose said in a note on Wednesday.
Shares of Abu Dhabi Commercial Bank extended losses to the fifth consecutive session. They have dropped the maximum allowed 5% in the past four trading days, and are down 44% this year.
NMC’s known debt pile has more than tripled in recent weeks to $6.6 billion, up from the $2.1 billion reported at the end of June, after it successively uncovered borrowings that hadn’t been disclosed to the board. The company found evidence of suspected fraud and debt that had been used for unknown purposes. The company’s chief financial officer and chairman have resigned.
Besides Abu Dhabi Commercial Bank, other lenders to NMC include HSBC Holdings Plc, JPMorgan Chase & Co. and Standard Chartered Plc, people said on Tuesday. Some of the banks are in talks to set up a committee to discuss ways to recover funds from NMC, according to the people.
The crisis at NMC, founded by Indian entrepreneur Bavaguthu Raghuram Shetty, has shaken investor confidence in the Middle Eastern business world and raised questions about the oversight of London-listed companies. NMC shares have been suspended since February, and the company was removed from the U.K. benchmark index last month.