Abu Dhabi Commercial Bank Faces Over $1 Billion NMC Exposure
Abu Dhabi Commercial Bank Faces Over $1 Billion NMC Exposure
(Bloomberg) --
Abu Dhabi Commercial Bank PJSC has more than $1 billion of exposure to troubled hospital operator NMC Health Plc, potentially putting one of the Middle East’s biggest financial institutions on the hook for losses on the debt, people familiar with the matter said.
The state-owned lender is currently seen as one of the biggest creditors to NMC, according to the people, who asked not to be identified because the information is private. HSBC Holdings Plc, JPMorgan Chase & Co. and Standard Chartered Plc also have large outstanding loans to the Abu Dhabi-based company, the people said.
Some of the lenders are in talks to set up a committee to discuss ways to recover funds from NMC, according to the people. The company’s known debt pile has more than tripled in recent weeks to $6.6 billion, up from the $2.1 billion reported at the end of June, after it successively uncovered borrowings that hadn’t been disclosed to the board.
Shares of Abu Dhabi Commercial Bank fell 4.9% at 1:24 p.m. Tuesday local time, giving the lender a market value of about $8.8 billion. The benchmark ADX General Index fell 0.3%.
Chairman Change
NMC said this month it found evidence of suspected fraud and debt that had been used for unknown purposes. The company’s chief financial officer and chairman have resigned.
The situation is fluid, and the full extent of NMC’s debt load may not be known yet, the people said. Representatives for NMC and the banks declined to comment.
Abu Dhabi Commercial Bank announced this month that Chairman Eissa Al Suwaidi, who oversaw last year’s three-way merger with Union National Bank and Al Hilal Bank, would step down from the board. He was replaced by Khaldoon Al Mubarak, the group chief executive officer of Abu Dhabi sovereign wealth fund Mubadala Investment Co.
The crisis at NMC, founded by Indian entrepreneur Bavaguthu Raghuram Shetty, has shaken investor confidence in the Middle Eastern business world and raised questions about the oversight of London-listed companies. NMC was once the darling of the stock markets after it became one of the few businesses from the region to enter the elite FTSE 100 index.
NMC shares have been suspended since February, and the company was removed from the U.K. benchmark index this month.
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