Monday, 1 June 2009

Saudi Billionaire With HSBC Stake Has Accounts Frozen (Update3)




May 31 (Bloomberg) -- Saudi Arabia’s central bank ordered the country’s banks to freeze the accounts of Maan al-Sanea, the Saudi billionaire who owns a stake in HSBC Holdings Plc, people familiar with the instructions said.

Al-Sanea, who is chairman of the Khobar-based Saad Group, also manages The International Banking Corp. B.S.C., the Bahrain-based unit of Ahmad Hamad Algosaibi & Brothers Co. that has defaulted on some of its debt, according to an Algosaibi official who spoke on condition of anonymity. Saad Group said al-Sanea does not manage the unit.

The Saudi Arabian Monetary Agency sent circulars to the legal departments of Saudi-based banks on May 28 and May 30 telling the lenders to freeze the accounts, including credit cards, of al-Sanea, 54, his wife and four family members, according to one person who read the documents. SAMA didn’t say why it took the action, according to the person, who declined to be identified because the information is confidential.

Algosaibi said last week that TIBC’s creditors weren’t paid “pending a debt restructuring exercise.” The bank has $2.2 billion of short-and medium-term debt, according to a May 16 report by Capital Intelligence, a credit analysis and ratings company.

Although al-Sanea was at one time named as a managing director of Ahmad Hamad Algosaibi & Brothers Co., he has not acted in such capacity for “many years” and is not involved in the operations of Ahmad Hamad Algosaibi & Brothers Co. “in any way,” a London-based spokesman said on behalf of Saad Group in response to questions from Bloomberg News.

Risk

People in the Saudi banking industry said their employers had received instructions to freeze al-Sanea’s credit lines, though they hadn’t seen the documents. They spoke on condition that they not be identified because the information is confidential and they’re not authorized to speak to the press.
“The impact of the global financial crisis is now showing on Saudi family businesses and the amount of risk they have accumulated,” John Sfakianakis, chief economist of Saudi British Bank, said in a telephone interview from Riyadh. “The state is healthy, but the global economic crisis is impacting at a micro level, on Saudi family businesses that have taken excessive risks.”
Al-Sanea who is married to Sana Algosaibi, of the Algosaibi family, has a net worth of $7 billion, ranking him as the world’s 62nd richest person,
Forbes magazine reported March 11.

Saad Group

As of Dec. 30, al-Sanea indirectly held 359.1 million shares, or 2.97 percent, of London-based HSBC, Europe’s biggest bank, according to an HSBC filing. The stake is worth about 2 billion pounds ($3.28 billion).
The central bank didn’t respond to two e-mails seeking comment on al-Sanea after the governor’s office asked for questions to be submitted electronically.

Saad Group was formed in the 1980s and was the first family conglomerate to be rated by Standard and Poor’s and Moody’s in Saudi Arabia, according to its Web site. Saad Investments Co. Ltd. is the investment and finance arm of the group, which holds listed debt and equity issues, funds and real estate, operating from offices in Bahrain and Geneva. The group also invests through Awal Bank, its Bahrain-based wholesale bank.
The group has international investments that include
Berkeley Group Holdings Plc, a U.K.-based residential and commercial property develop company, York Pharma Plc a U.K, provider of medicines for skin diseases, Imagination Technologies Group Plc, the U.K. maker of Pure digital radios, Syndicate Asset Management Plc which invests in the global asset management industry, Proton Power Systems Plc, which produces fuel cell systems for industrial applications.

Borrowing

Al-Sanea’s Saad Investment Co. received a $2.82 billion loan from a group of 26 European, U.S., Asian and Arab banks in September 2007 as the global credit crisis damped demand for debt. Earlier that year, Saad Trading Contracting & Financial Services Co., part of al-Sanea’s Saad Group of companies, said it would borrow $5 billion as part of a 20-year plan to diversify investments inside and outside the kingdom.
The Middle East Economic Digest reported on May 23 that Algosaibi had defaulted on $1 billion of foreign exchange transactions, trade finance loans and swap agreements. The magazine cited unidentified bankers.
The default by TIBC, Algosaibi’s Bahrain-based unit, was a “conscious decision not to honor debt payments,” even though the bank’s $400 million equity portfolio means it had enough money to do so, Standard & Poor’s Ratings Services said May 12.
‘Financially Solid’

Algosaibi said May 27 that it was “financially solid and capable of meeting obligations.”
Algosaibi, founded in the 1940s, is a major investor inside Saudi Arabia, and owns shipping companies, a hotel and has significant stakes in banks inside the kingdom including Saudi British Bank and Arab National Bank, according to its Web site. The president of the family-owned holding company, Sulaiman Hamad Algosaibi, died earlier this year.

S&P revised its outlook on Saad Group and related entities on May 22 to negative from stable because of its increased real- estate exposure resulting in less liquidity and a more limited geographic diversity of its holdings. S&P affirmed the company’s “BBB+/A-2” corporate credit ratings.

“The ratings are constrained by the high concentration of securities holdings in the global financial services sector, the volatility of Saad Group’s portfolio, the active use of debt to expand Saad Group’s asset base, and the relatively low liquidity of real-estate holdings, which represent an increasing portion of Saad Group’s portfolio,” S&P said in the report.


To contact the reporter on this story: Camilla Hall in Dubai at chall24@bloomberg.net
Last Updated: May 31, 2009 10:07 EDT

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