Western banks have begun to close down credit lines to Maan al-Sanea and his investment entity, Saad Group.
Some banks that had lending relationships with the Group had started liquidating shareholdings.
The moves came after news of an edict from the United Arab Emirates central bank, restricting lendersâ?? business with Saad or related companies, including Ahmad Hamad Algosaibi & Brothers. The central bank had instructed local banks not to grant new facilities to the Saudi groups until further notice.
According to people familiar with the matter Citigroup on Wednesday placed 30m shares, or a 4 per cent stake, in 3i Infrastructure, owned by Mr Sanea at 85p. The previous day, the bank placed 16.1m shares in Berkeley at 701p, the homebuilder. Credit Suisse placed another 4.4m Berkeley shares at 715p, according to Bloomberg. This week, Saad Group sold half its stake in Berkeley.
It has emerged that the Saudi central bank had frozen the personal accounts of Mr Sanea, who is also a major shareholder in HSBC. The action was taken shortly after the International Banking Corporation (TIBC), a wholly-owned entity of Ahmad Hamad Algosaibi & Brothers, had defaulted.
Saad Group has since appointed Lawrence Graham LLP and BDO Corporate Finance as advisers as it seeks to restructure its debt.
Algosaibi has not made public comments, but it is understood that TIBC defaulted because its parent was carrying out a group-wide debt restructuring.
In a second circular, the United Arab Emiratesâ?? central bank has told banks they may offset any credit facilities with two troubled Saudi groups against deposits held by the companies.
The Algosaibi group was one of the Gulfâ??s most respected family companies and able to borrow almost on reputation alone. Saad Group, which had been rated by both Moodyâ??s and Standard and Poorâ??s, has interest across the region and internationally, with a high exposure to property and the financial sector. It had assets of $30.6bn by the end of 2008.
