U.A.E. Hires Adviser to Fix Top Middle East Remittance House

(Bloomberg) -- The United Arab Emirates central bank has hired an adviser to help sort out debt and operational issues at one of the Middle East’s largest remittance businesses, according to people with knowledge of the matter.

Alvarez & Marsal Holdings LLC is advising the central bank on the management of UAE Exchange, the people said, asking not to be identified because the information is private. The regulator last month took the rare step of assuming control over the firm’s operations in the country as its London-listed parent company, Finablr Plc, prepares for potential insolvency.

UAE Exchange plays a key role in the oil-rich nation, as it’s the biggest money-transfer business in an economy hosting millions of expatriate workers who send their salaries back home. It has branches across popular malls and business centers and is one of the largest employers in the United Arab Emirates with thousands of staff.

The company, set up by embattled Indian entrepreneur Bavaguthu Raghuram Shetty, has defaulted on about $300 million of foreign-exchange loans, people with knowledge of the matter said earlier this week. Lenders that arranged the facility -- including Barclays Plc, Goldman Sachs Group Inc., JPMorgan Chase & Co. and Commercial Bank of Dubai PSC -- haven’t been repaid due the mounting problems surrounding Finablr, the people said.

Lender Exposure

Finablr has warned that its board couldn’t accurately assess its financial situation and its chief executive officer has stepped down. While Alvarez & Marsal’s role is currently focused on Abu Dhabi-based UAE Exchange, it could later be expanded, the people said.

A representative for the U.A.E. central bank didn’t immediately respond to requests for comment. Finablr referred queries to UAE Exchange, which declined to comment. A representative Alvarez & Marsal also declined to comment.

The central bank regulates UAE Exchange’s currency exchange and remittance operations in the Gulf state. It also supervises the nation’s commercial lenders, several of which have been caught up in the growing scandal surrounding Finablr and another company started by Shetty, Middle Eastern hospital operator NMC Health Plc.

Abu Dhabi Commercial Bank PJSC said in a statement Wednesday that it has about $981 million of exposure to NMC. Those liabilities are equal to about 82% of its projected profit this year, according to Bloomberg calculations based on analyst estimates. Abu Dhabi Commercial Bank, currently seen as one of the hospital operator’s biggest creditors, hired Lazard Ltd. to advise on its exposure to NMC and Finablr, Bloomberg News has reported.

Central Bank Leadership

The United Arab Emirates replaced its central bank governor this week, choosing a former head of its biggest lender to take the helm at a time the coronavirus ravages the economy. Abdel Hamid Saeed, who was previously in charge of First Abu Dhabi Bank PJSC, takes over from Mubarak Al Mansoori, who’s been in the job since 2014.

The veteran banker is coming in as the central bank is leading efforts in the Gulf state to blunt the economic damage from the coronavirus outbreak. So far, it’s pledged a package totaling around $34 billion to support the country’s banking sector.

UAE Exchange was founded by Shetty in 1980, becoming one of the largest remittance houses in the Middle East by mainly catering to Indian expatriate workers in the Gulf. It was eventually folded into Finablr, which also owns Travelex Holdings Ltd. and was listed on the London Stock Exchange less than a year ago.

Finablr had a market of 77 million pounds ($95 million) when it was halted from trading in March, down from a peak of 1.5 billion pounds in December. Its stock has been hit after NMC was targeted by short seller Muddy Waters and later found evidence of suspected fraud.

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