Saudi Arabia

Two Saudi Arabian-linked banks have become the first lenders with ties to the kingdom to sign a debt settlement plan with Ahmad Hamad al-Gosaibi and Brothers (AHAB), the company's chief executive said, opening the way for the conglomerate to try to push through a multibillion-dollar deal with creditors, the International New York Times reported on a Reuters story.

Bank creditors of detained Saudi Arabian tycoon, Maan al-Sanea, have asked his advisers for more details on a proposed settlement covering 16 billion riyals ($4.3 billion) in claims before they agree to move forward with the process, sources close to the matter said. Banks met in Dubai on Wednesday as they seek to resolve the debt crisis that has rumbled on since al-Sanea’s company Saad Group defaulted on its debt in 2009, Reuters reported.

Bahrain-based Gulf International Bank has sold its 513.6 million riyals ($137 million) claim against Ahmad Hamad Al-Gosaibi and Brothers, which has been locked in a near decade-long dispute with creditors, sources told Reuters. And now Standard Chartered, Dubai-based Emirates NBD and Bahrain’s Arab Banking Corporation are also seeking to sell AHAB debt totalling around 2.24 billion riyals, the financial sector sources said. AHAB and Saad Group both defaulted in Saudi Arabia’s biggest financial meltdown in 2009, with international and regional banks and other creditors owed about $22 billion.

Saudi Arabia’s cabinet has approved a bankruptcy law, sources familiar with the matter said on Sunday, giving a boost to efforts to make the kingdom more enticing to investors, Reuters reported. Modern bankruptcy legislation does not currently exist in Saudi Arabia, creating difficulties for struggling companies seeking to restructure debt with creditors since the 2009 global financial crisis and, more recently, the dip in oil prices.

Saudi Arabia has accelerated steps to resolve a $22-billion debt dispute that is seen by investors as a litmus test of Crown Prince Mohammed bin Salman's commitment to reforms, three sources familiar with the matter say. Legal battles over the debts left by Saad Group and Ahmad Hamad al-Gosaibi & Bros Co (AHAB) have dragged on for almost a decade since the two family conglomerates collapsed in 2009, the International New York Times reported on a Reuters story. From Switzerland to the Cayman Islands, the two groups have squabbled over which of them is to blame for the meltdown.

Saudi Arabia will begin implementing a new bankruptcy law early next year as part of efforts to attract foreign investment and encourage private sector activity, Saudi-owned broadcaster Al Arabiya reported citing the kingdom’s commerce minister. Under current legislation there is no easy way to wind up the activities of indebted companies in Saudi Arabia and the new law could help with government plans to restructure the economy and make it more attractive to outside investors, Reuters reported.

Net foreign assets at Saudi Arabia's central bank, a measure of its ability to support its currency, look set to fall sharply this year as oil prices slump and Riyadh expands its sovereign wealth fund to invest abroad, the International New York Times reported on a Reuters story. They shrank from a record high of $737 billion (578.36 billion pounds) in August 2014 to $529 billion at the end of 2016 as the government liquidated some assets to cover the huge budget deficit caused by the fall in oil prices.

The International Monetary Fund warned Saudi Arabia on Wednesday not to tighten fiscal policy too fast, saying rapid cuts to the government's budget deficit could damage the economy, the International New York Times reported on a Reuters story. Tim Callen, head of an IMF team which held annual consultations with Saudi officials last week, said Riyadh's goal of balancing its budget was appropriate. Low oil prices in the past couple of years have pushed it deep into the red.

Saudi Arabia has dodged a financial crisis due to low oil prices by slashing state spending and borrowing tens of billions of dollars abroad, but now it faces a tougher challenge: getting the economy growing again, the International New York Times reported on a Reuters story. In a series of interviews with Reuters reporters last week, senior Saudi officials said reforms announced on national television by Deputy Crown Prince Mohammed bin Salman a year ago had stabilised state finances enough for the government to begin focusing on investing in the economy.

Saudi Arabia’s King Salman has reinstated allowances and bonuses for state employees as its finances improve, a move aimed at boosting consumer confidence to support growth as the kingdom overhauls its oil-dependent economy, The Wall Street Journal reported. In a spate of decrees issued late on Saturday, the king also appointed one of his sons, Prince Abdulaziz bin Salman, as the minister of state for energy, industry and mineral resources. Another of his sons, Prince Khaled bin Salman, was named ambassador to the U.S., according to the official Saudi Press Agency.