First Gulf Bank, the UAE's fourth-largest bank by assets, is suing the troubled Saudi conglomerate Ahmad Hamad Al Gosaibi and Brothers over an alleged default on Dh58.7 million (US$15.98m) of loans. The lawsuit, lodged in the Abu Dhabi Court of First Instance last year, seeks recovery of the value of the loans plus lawyers' fees and interest, court documents obtained by The National show.
The lawsuit names Al Gosaibi's trading business in Dubai and its parent company in Saudi Arabia as defendants. Representatives of First Gulf Bank and the Al Gosaibi group could not be reached for comment. But a lawyer at Hilal and Associates in Abu Dhabi, which is acting for First Gulf Bank, said the case was still in the Court of First Instance and that no judgment had yet been made. He confirmed the Dh58.7m default claim but said the remaining details of the case were "secret".
The Al Gosaibi group has been fighting legal battles across the globe after it began to default on financial obligations in the middle of last year. The group, one of Saudi Arabia's largest family-owned businesses, has claimed it defaulted only because it was the victim of a $10 billion fraud by Maan al Sanea, the chairman of the Saad Group, another Saudi conglomerate. Mr al Sanea, whose Saad Group also began to default on financial obligations last year, denies those accusations.
First Gulf Bank said a year ago that it had about $55m in combined exposures to the Al Gosaibi and Saad groups, including about $30m to Al Gosaibi. UAE banks are estimated to be owed about $3bn by the groups, part of a wider exposure by banks globally estimated at more than $10bn. The defaults at Al Gosaibi and Saad sent shock waves through the region's banking system, leading to a spike in provisions for bad loans.
First Gulf Bank booked Dh1.77bn of provisions last year, up from Dh566m a year before. Court cases in the dispute between Saad, Al Gosaibi and their banks have been filed in London, New York, the Cayman Islands, Bahrain, Saudi Arabia, the UAE and other jurisdictions. The defaults and legal battles have only added to problems for Gulf banks already wrestling with the consequences of Dubai World's proposed $23.5bn debt restructuring, which the majority of its creditors agreed to last month. A First Gulf Bank executive said last November that the lender had at least Dh5bn of exposure to state-owned companies in Dubai.
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