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Central Bank Presses Banks on Saudi Debt Provisions

ABU DHABI — The UAE central bank has told banks to take provisions worth half their exposure to troubled Saudi firms Saad Group and Ahmad Hamad Algosaibi and Bros Co by year-end, a newspaper reported.

Central Bank Governor Nasser Al Suweidi also told lenders in a circular sent on Sunday to take provisions covering their entire exposure to the Bahrain unit of Saad, Awal Bank, and that of Algosaibi, The International Banking Corporation by December 31, the newspaper reported. Suweidi said in September that 13 banks in the country were exposed to Saad and AHAB, whose debt troubles have affected local and international lenders across the Gulf Arab region. The two firms, which are restructuring their debt, face legal battles in courts in and outside of the region, with some bankers expecting writedowns to affect 120 banks at a cost of $22 billion.