Maan al Sanea, the billionaire owner of the Saudi conglomerate Saad Group, lowered his stake in Samba Financial Group by at least 2.8 percentage points on Wednesday. After the close of the Saudi stock market, where Samba is listed, Mr al Sanea's name no longer appeared on a roster of investors owning 5 per cent or more of the Saudi lender. Before the close, Mr al Sanea had owned 7.8 per cent. That stake was valued at 3.25 billion Saudi riyals (Dh3.18bn) based on the previous day's close of trading, according to Bloomberg data.
The reduction follows similar moves by Mr al Sanea and the Saad Group as they negotiate with creditors to restructure debt. Mr al Sanea sold part of a stake in Berkeley Group, a major British home builder, and 3i Infrastructure, an investment firm, after Saad Group began to default on financial obligations in April and May. Mr al Sanea's trimming of his Samba stake also came after an unsourced report on Wednesday on Al Arabiya saying Saad Group had agreed to repay Saudi lenders.
On Sunday, Samba said that Saud al Gosaibi, a partner at the Saudi family conglomerate Ahmad Hamad Al Gosaibi and Brothers (AHAB), was no longer its chairman and had left the board. AHAB has sued Mr al Sanea in a New York court, alleging that he masterminded a decades-long fraud of about US$10bn (Dh36.73bn), causing the defaults at Saad and at AHAB. The financial problems at the two conglomerates have sent ripples through the region's banking system, forcing lenders to take massive write-downs and set aside provisions to cushion against defaults. Publicly listed banks in the Gulf booked more than $3bn in provisions during the first half of this year, in part to make allowances for AHAB and Saad defaults.
The defaults, which began in late April, have also resulted in a series of legal claims against the groups. Mashreqbank, a Dubai-based lender, has sued AHAB in New York in connection with defaults on $225m in currency swap transactions. Deutsche Bank and Commerzbank have also sued the firm in New York and London. And earlier this week, Societe Generale, one of France's largest banks, lodged a further complaint in London against a Saad subsidiary. Other cases are pending in the Cayman Islands, where many of Saad's business arms are incorporated.
Altogether, Saad and AHAB are estimated to owe tens of billions of dollars to creditors worldwide, but a precise breakdown of the size and scope of their debts has yet to emerge. Saudi banks alone are thought to be owed about $5bn by the groups. * with Reuters