BNP, Citigroup Among Most Exposed in Mideast’s Biggest Default

(Bloomberg) -- BNP Paribas SA and Citigroup Inc. are among global banks with the most exposure to about $14 billion of accepted claims related to the collapse of two Saudi business empires more than a decade ago.

The French bank is owed about $750 million by Maan al-Sanea’s Saad Group and Ahmad Hamad Algosaibi & Brothers Co. -- two family holding companies that defaulted on roughly $16 billion in 2009 -- after a Saudi court accepted its claims, according to documents seen by Bloomberg. The U.S. bank is owed about $270 million by Saad Group, the documents show.

The court’s approval last month of claims from more than 100 local and international banks, hedge funds and other creditors is a milestone in the Middle East’s longest-running and biggest defaults that have involved court cases spanning from London to the Cayman Islands.

Family-owned conglomerate Algosaibi, known as AHAB, defaulted on about $9 billion of debt, while Saad Group was unable to repay roughly $7 billion after the global economic crisis froze credit markets and asset prices slumped.

Global Claims

The court also accepted about $170 million worth of claims from Deutsche Bank AG, roughly $200 million from Standard Chartered Plc and $175 million from Raiffeisen Bank International AG, according to the documents.

Regional lenders are also heavily exposed: Mashreqbank PSC had about $630 million of its claims accepted, Emirates NBD Bank PJSC about $330 million, and Abu Dhabi Commercial Bank PJSC, about $470 million.

Representatives for BNP Paribas, Citigroup, Raiffeisen Bank, Emirates NBD, Deutsche Bank and Abu Dhabi Commercial Bank declined to comment. Representatives for Mashreqbank, Standard Chartered and Saad Group didn’t respond to requests for comment.

Following the court’s decision, AHAB will start to form a new creditors’ committee and propose a revised restructuring proposal to claimants, according to Algosaibi’s acting Chief Executive Officer Simon Charlton.

The case is currently going through recently-established bankruptcy proceedings in Saudi Arabia, introduced as part of the kingdom’s efforts to attract foreign investors. A resolution would end uncertainty for banks and help the country’s business appeal.

©2020 Bloomberg L.P.

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