Two Saudi-linked banks join Al-Gosaibi debt settlement plan

Two Saudi-linked banks have signed a debt settlement plan with Ahmad Hamad al-Gosaibi and Brothers (AHAB), Reuters reported, citing Simon Charlton, the company’s chief restructuring officer and acting chief executive officer.

Bahrain-based Gulf International Bank (GIB), which is 97 percent owned by Saudi Arabia’s Public Investment Fund, and Alawwal Bank, the Kingdom’s oldest lender and 40 percent owned by Royal Bank of Scotland, have signed the deal with AHAB, the news agency reported.

“We hope that more Saudi Arabian banks will join the settlement in the coming weeks, but as we have reached the threshold under the bankruptcy law we are prepared to seek a deal through that route, if necessary,” said Charlton.

In 2009, AHAB defaulted on about SAR 22 billion ($5.9 billion) of debt. Over the years, Saudi banks and those with links to the Kingdom have refused to join other creditors in the debt settlement deal, claiming “the terms on offer were not satisfactory”.

Eleven banks majority owned by Saudi Arabian shareholders have exposure to AHAB, of the total of 94 creditor institutions.

GIB and Alawwal Bank have sold their exposure after signing the deal, Reuters said.