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Blown billions, Part II
Banks in the Gulf and beyond are reeling from Saudi Arabia’s Saad and al-Gosaibi scandal. We look at the web of relationships behind a dispute that will change the way business is done in the region, reports Trend magazine. Part II
October 17, 2009 9:27 by Ehtesham Shahid
Mashreq fired back, issuing a public statement that defended itself while appearing to bolster al-Sanea’s case at the
same time. The bank called the countercharges “completely without merit, outrageous in the extreme and really nothing more than an attempt by al-Gosaibi [AHAB] to divert attention away from their own responsibility in failing to perform on their obligations.”
Regardless of who is to blame, the sums involved may derail a Gulf economic recovery that otherwise appears to be picking up steam. A Standard & Poor’s survey of 30 banks across the region puts the total gross exposure to the two groups at $9.6 billion. In May, AHAB is said to have made an offer in a closed meeting in Manama with a group of creditors that highlights the amount of leverage the company was operating under.
According to a member of the committee of creditors formed to renegotiate its debts during this meeting, the company showed the total volume of loans it had contracted in 2007 and 2008 was $34.8 billion, with $10.4 billion from Saudi banks, $14 billion from other Gulf banks, and $10.4 billion from foreign banks.