HSBC Bank Oman reveals exposure of $16m to NMC Health

Disclosure follows a note from Bank Nizwa last week that it had a 5 million Omani rial exposure to an NMC subsidiary

The demise of NMC was sparked by US short seller Muddy Waters. Bloomberg

HSBC Bank Oman disclosed an exposure of about $16 million (Dh58.76m) to embattled UAE healthcare firm NMC Health.

The total exposure represents approximately 0.2 per cent of the lender’s total assets, HSBC Bank Oman said in a statement to Muscat Securities Market, where its shares trade. Its disclosure follows a note from Bank Nizwa on the Muscat Securities Market on Thursday that it had a 5 million Omani rial (Dh47.75m) exposure to NMC Health through an Oman subsidiary, Elegant Medical Centre, in which NMC Health had a 34.3 per cent stake.

A UK court placed NMC into administration on the application of one of its biggest lenders, Abu Dhabi Commercial Bank last week.

The joint administrators from turnaround advisory firm Alvarez & Marsal will take immediate control of NMC Health and will work on behalf of all stakeholders, according to a statement from ADCB on Thursday.

“Their priority is to ensure stability and the continuation of uninterrupted healthcare services at the group’s medical facilities,” ADCB said.

“The joint administrators are also tasked with implementing robust governance, conducting a full, transparent investigation into suspected previous irregular financial activity and taking adequate steps to initiate the recovery of any missing assets and funds.”

ADCB earlier declared that it has an exposure of $981m to NMC. ADCB's exposure increases to Dh$1.16bn when factoring in Finablr, another company owned by NMC Health's founder BR Shetty, which is not in administration. Overall, UAE banks have a combined exposure of at least Dh8bn to NMC.

Dubai’s biggest lender, Emirates NBD, and a number of other banks including Dubai Islamic Bank, Abu Dhabi Islamic Bank, Commercial Bank International, National Bank of Fujairah and RAK Bank, among others, extended financing to NMC.

Dubai Islamic Bank said it is owed $425m by NMC, and that Noor Bank, which it acquired in January, is owed $116m. Abu Dhabi Islamic Bank is owed $291.4m, and has a $31m investment in an NMC Health sukuk.

Dubai’s biggest lender, Emirates NBD, is owed Dh747.3m – most of which is due to Emirates Islamic Bank, the bank said last week.

NMC was founded by Mr Shetty in Abu Dhabi in 1975, and now employs more than 2,000 doctors and about 20,000 other staff. It operates 2,200 hospital beds as well as clinics and pharmacies in 19 countries.

The company has made a series of damaging disclosures in the past few months after a report by activist investor Muddy Waters in December alleged it inflated cash balances, overpaid for assets and understated its debt.

Last month, the company revealed its debt stood at $6.6 billion, substantially higher than the $2.1bn declared in its last filed accounts. A review committee also discovered evidence of “suspected fraudulent behaviour”.

Following the disclosures, two joint non-executive chairmen, including Mr Shetty, an executive vice-chairman, a chief executive, chief financial officer and a member of the company’s treasury department all departed from the company.

NMC appointed Ithmar Capital’s managing partner, Faisal Belhoul, as executive chairman on March 26 after the Dubai-based private equity firm took a 9 per cent stake in the healthcare company.

In February, the UK’s Financial Conduct Authority launched an investigation into NMC's activities after the company's shares were suspended from trading on the London Stock Exchange.