It is a slow news day so just wondering, you think this middle eastern credit problem could effect?
‘Never Go Bust’ Families Mean End of Easy Credit (Update2)
Sept. 17 (Bloomberg) -- Maan al-Sanea, one of Saudi Arabia’s richest men, operates his corporate empire barricaded behind a four-foot high concrete wall, painted in bright red stripes. A second, higher wall is topped with barbed wire, a reminder of the terrorist attack on his company’s nearby residential compound five years ago that killed 22 people.
Now al-Sanea is under a different kind of siege, this time from the family he married into and helped make him wealthy. In a region where business disputes are routinely settled in private, the family feud between the two most prominent names in the Saudi oil city of Al-Khobar -- Algosaibi and al-Sanea -- has erupted into public and curbed lending across the Gulf.
Eighty banks, including BNP Paribas SA and Citigroup Inc., are owed at least $15.7 billion, sparking a flurry of litigation. The battle has increased pressure for more transparency among the region’s family-run firms and less reliance on name lending, or borrowing based on reputation.
“With Maan al-Sanea or the Algosaibi family, the perception was that they would never go bust or never default,” Yazan Abdeen, a Dubai fund manager at ING Investment Management, said. “Facts are showing that this can happen. The banks in Saudi, Kuwait and the United Arab Emirates will get a hit, and this will make the banks alter their own lending models. It’s like a ‘black swan’ event, something no one saw coming.”
Al-Khobar, an oil-rich seaside city in the Persian Gulf, 250 miles east of Riyadh, is the center of a legal and financial struggle that has seen some of the Algosaibis accuse al-Sanea, ranked 62nd on this year’s Forbes magazine list of richest people, in court filings of siphoning off $10 billion in assets while he was running a money-management business for them.
The Saudi Arabian central bank ordered a freeze of al- Sanea’s accounts, bankers familiar with the instructions said on May 31. The Algosaibis then used a Cayman Islands court order to try to freeze $9.2 billion of his assets, court documents show.
“All of the allegations made are wholly without foundation,” al-Sanea’s company, Saad Group, said yesterday in an e-mailed statement. “While maintaining an absolute focus on its own restructuring, the Saad Group will respond appropriately and in a timely fashion to the erroneous claims made against it. However, this will be through a proper judicial process and not through the media.”
The Algosaibis declined to comment for this story, James Courtovich, a Washington-based spokesman for the family, said.
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