The current global economic meltdown is taking a heavy toll on Saudi billionaire Maan Al-Senea. The Saudi Arabian Central Bank froze the accounts of Al-Senea, owner of the Saad Group, and his family members recently without warning. According to the bank, the reason for freezing their accounts is confidential. Al-Senea announced that the Saad group was searching for ways to restructure the outstanding debts of its real estate, banking, and health care companies.
In a statement made last week, the Saad group said that "recent external events… specifically affecting the Bahraini banking sector have led to a short-term liquidity squeeze". Al-Senea denies reports that he still manages the International Banking Corp. of Bahrain, which has recently defaulted on its debt. That bank is controlled by another Saudi family company, the Algosaibi Group.
Citing a lack of adequate information to make an updated analysis, Moody's Investors Service recently withdrew all of its credit ratings of Saad Group, including the B1 issuer ratings. In addition, S&P dropped its rating of Saad Group from BBB+ to D, a decrease of 14 levels, and will no longer rate the group.
According to the Saudi Gazette, smaller banks are looking for consolidation in order to weather the current economic storm. Shareholders of Bahraini Saudi Bank voted in favor of a takeover by Bahrain's Al Salam last week. Furthermore, the recent economic downturn is affecting Saudi family businesses that have taken big risks with investments. The Gulf Daily News reports that Bahrain based Awal Bank, owned by Al-Senea, $4.9 billion in liabilities last year alone.
With recent news that the Al-Senea and Algosaibi families are both experiencing financial trouble, the future of economic stability on a micro level in the Gulf region is now in question. According to Financial Times, the oil-rich family companies in the Gulf "have overextended during the boom years, which saw Gulf States accumulate huge petrodollar reserves and fuelled rapid expansion, and are beginning to pay the price".
© 2009 Mena Report (www.menareport.com)
Banking & Finance
