ABU DHABI: Saudi Arabian Monetary Agency (SAMA) Gov. Muhammad Al-Jasser said Monday that troubled Saad Group has struck an agreement with Saudi creditors to repay syndicated and bilateral loans.
Asked how he felt about an agreement between Saad and local creditors, Al-Jasser said: “Any agreement is good ... This is something between the creditors and the borrowers. My understanding is they have agreed to settle.”
A Saad spokesman in London could not be reached for comment while a Kingdom-based spokesman declined to comment.
But the reported deal, which has left international creditors in the cold, drew the ire of the United Arab Emirates, which said 13 banks in the country were exposed to Saad and Ahmad Hamad Algosaibi and Bros Co. (AHAB). And Oman said its banks may need to take more provisions this year after Saad and AHAB defaulted on billions of dollars of debt, while Bahrain said Saad and AHAB had legal obligations toward the two firms’ banking subsidiaries in the island kingdom.
On Sept. 17 two bankers said a Saudi government panel had brokered a deal between local creditors and Saad Group. One banker said the deal covered repaying syndicated loans worth $700 million and bilateral loans of unknown volume.
The banks agreed to a 15 percent cut on the outstanding debts to reach the accord.
Al-Jasser, who was speaking at the annual meeting of the Arab Monetary Fund which brought together Arab central bankers in Abu Dhabi, said the Saudi central bank was not involved in this agreement.
Saad and AHAB are embroiled in a legal battle in the United States after defaulting on debts, with some bankers warning the total cost of write-downs may hit $22 billion and affect around 120 banks.
The debt implosion is the biggest corporate scandal to hit the Middle East since the start of the global financial crisis and struck at the profitability of banks in the region, which have raised provisions to cover loan losses.
The Saad deal with local Saudi banks, which banking sources said involved seven banks and covered total debts of SR9 billion ($2.4 billion), has left international banks — including from the Gulf — wondering if they were sidestepped. “As far as we are concerned we will deal with the shareholders of the banks. They have legal obligations,” Rasheed Al-Maraj, Bahrain’s central bank governor, said Monday, adding the legal ties were through Saad and AHAB’s Bahraini banking units, Awal Bank and TIBC, respectively.
Bahrain seized the two banks in July, citing a substantial shortfall in their assets compared to liabilities. It has since appointed external administrators to run the banks.