Middle East and Gulf: Family misfortunes
Financial troubles are plaguing some of the Gulf’s most prominent families.
Across the Middle East and beyond, shock waves from the surprise defaults of Saudi Arabia’s Saad Group and Ahmad Hamad Al Gosaibi & Brothers are being felt.
Up to 37 creditors provided $6.3 billion in syndicated loans to the two groups. Citi and BNP Paribas have the biggest exposures, accounting for about 16%. That will be just what is so far visible, though, as other forms of credit were provided through more private channels.
With no official reason for the defaults put forward, theories abound as to what might have triggered them. One is that Maan Al Sanea, Saad’s chairman, got into a dispute with the younger leadership of the Al Gosaibi group – perhaps partly as a result of Al Sanea’s former influence in the Al Gosaibi group. Both Saad and Al Gosaibi insist, however, that their troubles are not connected.
In a statement in June, the Al Gosaibi group pointed to "strong evidence that there may have been substantial financial irregularities" within its financial services arm. But no more information was given.
Complicating matters is the fact that Saad and Al Gosaibi’s Bahraini bank subsidiaries, Awal and The International Banking Corporation, have also defaulted, leading to more questions being raised about the validity of Bahrain’s lightly regulated offshore financial sector.