15th Jun 2009 07:00
Bank Muscat exposures to the Al Gosaibi Group and Saud Group
It is market information that recently, two large groups in Saudi Arabia, the Al Gosaibi Group and the Saad Group, have defaulted on their payment obligations across a number of banks. BankMuscat has direct exposure to these groups amounting to approximately RO 49 million through our Riyadh Branch. One of our associates, BMI Bank, Bahrain, also has exposure to these groups, amounting to approximately RO 17 million. The exposure of BM and BMI Bank is to the operating companies of the group and we have no exposure to The International Banking Corporation, Bahrain or Awal Bank, Bahrain which form part of these groups.
Though these groups are in default on some of their obligations, we take comfort in the fact that the groups' operating companies are profit making and based on the last published financials, have strong balance sheets. Further, given the prominence of these groups, the size of their debts and the number of international and regional banks involved, we are confident the concerned governments and regulators would take proactive steps to ensure an orderly settlement of obligations. The groups are in the process of appointing expert advisers to restructure their debts and we hope the process will be completed soon. However, it is difficult at this stage to confirm any timelines, provisions if any we might have to take for a period of time etc. We will keep the market informed as more clarity emerges.
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