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Dubai's Mashreq says Saudi Exposure "Not Significant" - ASHARQ AL-AWSAT English Archive
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DUBAI, (Reuters) – Dubai-based Mashreq, one the UAE’s largest banks by market value, said it has taken legal action to protect its interests because of problems with Saudi clients, but that amounts involved were “not significant”.

“We appreciate that all defaults are of concern. However, the amounts involved are not significant as evidenced by the strength and trading position of the bank as reported in our Q1 results,” John Iossifidis, Mashreq’s head of international banking, said in a statement. He did not name the clients.

“We expect and are confident of a satisfactory resolution in due course,” he added.

UAE Central Bank Governor Sultan Nasser al-Suweidi said on Monday that banks in the Gulf Arab state had exposure to troubled Saudi conglomerates Saad Group and Ahmad Hamad Al Gosaibi Group & Brothers (AHAB).

AHAB said on Tuesday it was about to start talks with creditors, after a newspaper reported it and Saad Group were seeking to restructure $10 billion in debt.

“Mashreq is aware of a number of problems faced by Saudi-based clients and has taken legal action to protect its interests when appropriate and is actively working with such clients, their advisors, regulators and other banks in an effort to resolve the matters,” Iossifidis said.

Central Bank of Oman Executive President Hamood Sangour al-Zadjali has said more Gulf banks may have to take provisions on Saad and AHAB, but that the sultanate’s largest lender, Bank Muscat BMAO.OM, was probably less exposed than regional counterparts.

Analysts expect more Gulf banks eventually to reveal exposure to the two family-owned conglomerates, which could prove to be one of the biggest defaults to hit the region since the onset of the financial crisis.

Saad’s woes have rattled a $30 billion empire chaired by billionaire Maan al-Sanea, whose family firm has a stake in HSBC Holdings Plc and owns businesses across the Gulf ranging from healthcare to contracting.

Bank Muscat said on June 11 its exposure to the two groups totalled 66 million rials ($171.5 million).

Mashreq posted a 4 percent rise in first-quarter profit to 484 million dirhams ($131.8 million), but raised its provisions to help it weather the financial crisis.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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