ABU DHABI, (Reuters) – The Abu Dhabi Securities Exchange (ADX) has directed banks to provide details of exposure and provisions taken to troubled Saudi groups Saad and Algosaibi as part of regulatory measures, the bourse said on Wednesday.
The request led to a flurry of statements by listed banks and comes after the UAE central bank governor said this week that 13 UAE banks were exposed to the troubled Saudi firms.
ADX sent out a circular urging banks to provide any exposure details by Sept. 30 or to let ADX know by what date banks can provide those details.
“Banks have been responding to our circular but so far no trading has been suspended,” Khaled Al Suwaidi, head of the listing companies department, told Reuters.
The two Saudi family businesses are undergoing a massive debt restructuring that has sent shockwaves through the regional banking system. Gulf central bankers on Tuesday warned commercial banks not to expect government bailouts of defaulting borrowers.
National Bank of Fujairah said its exposure to Saudi Arabia’s Algosaibi Group was $10.2 million and it also had $15.2 million outstanding with Saad’s Bahrain unit, Awal Bank.
The bank said it had taken provisions of $3.3 million for Algosaibi and $6.5 million for Awal Bank as of Aug. 31.
Bahrain’s central bank in July seized Saad’s Awal Bank unit and a bank owned by Algosaibi, The International Banking Corporation, saying they had substantial shortfalls of assets relative to liabilities.
Meanwhile, Sharjah Islamic Bank SIB.AD said its exposure to Saudi Arabia’s Algosaibi Group was 55 million dirhams ($15 million), but it had no exposure to the Saad Group.
Three other banks — United Arab Bank, RakBank and Bank of Sharjah — said they had no exposure to the two groups.
National Bank of Abu Dhabi NBAD.AD reiterated its July announcement that it had $7.5 million in exposure to Algosaibi and $3.4 million in exposure to Saad.
Last week, Abu Dhabi Commercial Bank, the UAE’s third largest lender by assets, said it held $609 million in exposure to the Saudi conglomerates, the biggest official disclosure of potential losses against the groups.
The ADX made the request of the banks in two circulars on Tuesday, initially instructing banks to provide the information before trading began on Wednesday. A subsequent circular sent later on Tuesday directed banks to provide the details or inform the ADX when banks could provide the required details.