Banks launch claims vs Algosaibis, National says

Frank Kane, of The National, has written a story confirming a serious blow to the Algosaibis; namely, that banks in Saudi Arabia have launched formal claims against the family for the “liabilities owed by its indebted businesses.”

Documents seen by the newspaper “show that at least four big banks in the kingdom have submitted claims to the Committee for the Resolution of Banking Disputes, a body set up by the Saudi Arabia Monetary Agency (SAMA), demanding immediate repayment of loans and credit facilities.”

The claims thus far amount to 3.2 billion Saudi riyals (Dh3.13bn), the largest from Al Rajhi Banking and Investment. The company says Algosaibi had declined to repay the 1.54 billion riyals despite "numerous and repeated requests". Arab National Bank, Bank Aljazira and Bank Albilad have also made substantial claims.

According to Mr Kane, a “source familiar with the situation said other big Saudi creditors, including NCB, Saudi Hollandi Bank and Saudi Investment Bank, were also pushing claims against the family, which could lift the total to about 8bn riyals.”

In a statement provided to the newspaper, the Al-Gosaibis legal counsel Eric Lewis confirmed that the claims have been lodged: "[Algosaibi] is committed to continuing the ongoing dialogue with all stakeholders, including its dialogue with Saudi banks...The filing of these lawsuits is not surprising, and confirms that Saudi banks will be part of a normal commercial and legal process rather than subject to any extraordinary process in Saudi."

It will now be interesting to see what events these claims trigger. It could be reasonable to expect further lawsuits against the Al-Gosaibis in Saudi Arabia – including from foreign creditors, as the newspaper's source intimated could happen.

We must also keep an eye on how these claims effect the workings of the King's Committee which was set up to investigate the dispute. Mr Kane writes that the claims “seem to dash hopes” that Committee can find a solution to the dispute. That view, however, seems to be contradicted by the Alwatan article, covererd by Ta'if last week, that suggested that it was, in fact, the Committee who instructed the banks to proceed.

Read the original National article here.