SAMA won't buy up the $15 billion debt of Ahmad Hamad Algosaibi & Bros. and Maan Al-Sanea's Saad Group that defaulted after borrowing more than SR58 billion (about $15.7 billion), said Muhammad Al-Jasser, the central bank governor. “Absolutely not,” Al-Jasser said when asked by Bloomberg News whether the Saudi Arabian Monetary Agency would buy up the debt from local banks. Units of the two family-owned businesses have borrowed at least SR58. 88 billion ($15.7 billion) from more than 80 regional and international banks, including Paris-based BNP Paribas SA, New York-based Citigroup Inc. and Arab Bank Plc in Amman, Jordan, according to documents provided by lenders. About $5 billion of that is owed to Saudi banks, Standard Chartered Plc said in an Aug. 26 report. Al-Jasser's comment made in London Saturday where he was attending a meeting of central bank governors and finance ministers of the Group of 20 countries refuted an Economist Intelligence Unit report this month that said the “fall-out for local banks may be limited as the Saudi Arabian Monetary Agency is expected to help local banks to cover losses.” International and regional banks are suing the Al-Khobar- based Saudi groups after both missed payments due from their Bahraini-based banking units, which are now under the administration of the Bahraini central bank. Court cases are also taking place between the two after the Al-Gosaibi group said in a May 22 New York filing that Al-Sanea, the owner of Saad Group, used ‘falsified documents' to obtain $10 billion. Saad Group will respond to the claim through the judicial process, according to an Aug. 1 e-mailed statement to Bloomberg News from the company. Qatar has bought up portfolios of local banks to boost the banking industry through the financial crisis. To date, SAMA has cut interest rates, reduced the reserve requirements for banks and placed deposits with banks. Saudi Arabia's economy will contract 1 percent this year as the debt problems of family-run businesses dissuade banks from lending, Riyadh-based Jadwa Investment Co. said in a July 28 report. In addition to these two Saudi conglomerates, “several other family groups are stressed financially,” Jadwa said. Al-Tuwairqi Group hired HSBC Holdings Plc to oversee a restructuring of its bank loans after the Saudi steelmaker was hurt by falling prices, a person familiar with the situation said June 24. The Dammam-based company is restructuring as much as SR7 billion ($1.9 billion) in debt, the person said.
