Recent reports that the Saad Group owned by Maan Al Sanea has reached some sort of debt settlement with Saudi banks is a matter of hope, but also of concern for international banks.
The fact that one of the parties in the massive dispute between two Saudi family groups is now beginning to reach some settlement on their debt is of course encouraging, as the dispute has cast a shadow on bank relationships with family-owned businesses and caused uncertainty in the vital financial sector of regional economies.
However, the reports that only Saudi banks were participating, to the tune of about 3.1 billion riyals (Dh3.03bn) is worrisome, especially for foreign banks who are reportedly owed billions of dollars. While all banks have to bear the consequences of their folly in extending loans on a name-only basis, without a deeper scrutiny on the activities of such Gulf family businesses, the fact is that a level playing field has to be established for all parties involved in financial disputes, without favouring national institutions.
This is what the US Federal Reserve did when it froze all outstanding settlement contracts when Lehman Brothers went bankrupt and a Fed settlement committee unwound Lehman's obligations, irrespective of their origin or ownership.
It is not hard to assume that the two Saudi family businesses at the heart of the dispute, Al Gosaibi and Saad, might also be tempted to cut a settlement deal with banks nearer to home, specifically those from GCC countries. The fact that other Gulf regulators noted that their domestic banks were not part of the settlement provides some comfort that no such deals were cut. The consequences of doing such backyard deals have long-term negative consequences to the region.
Globalisation comes with both benefits and costs. In the Gulf, we often cite a long list of perceived benefits: mobility of ideas and capital; unrestricted trade flows; the ability to attract investment; and ensuring a level playing field for developing nations striving to diversify their narrow resource based economies. And the world expects the same from the Gulf.
There cannot be two sets rules at the same time - a globalised one when it suits us and a closed, nationalistic one when we want to protect ourselves.
It could just be that the Saudi banks managed to cover themselves by having Saudi based collateral against their loans. From the dribs and drabs of information emerging, it does seem that Mr al Sanei's personal obligations were secured against local bank shares which is perfectly acceptable to international banks if this would be communicated more openly by the banks concerned.
The problem lies with loans extended to the Saad corporates and what type of collateral they provided and if this collateral is somehow also pledged to the offshore entities that borrowed from international banks leaving them now exposed.
Banks generally tend to follow each other in they extend loans to key clients, based on the simple promise that if they don't, then they lose out on the deal. In retrospect, many will be reassess how they deal with family businesses in the future and the quality of information that needs to be released by them. But for the time being, foreign banks are willing to absorb loan losses as long as all are treated the same. To argue that international banks with their larger capital bases and balance sheets can somehow "afford" to take greater hits compared to their smaller Saudi or Gulf counterparts is not an argument.
Not adopting a level playing field policy and see it enforced by the GCC financial regulators, could come back to haunt the Gulf in the long run. Many GCC countries have aspired to establish international standard financial centres, hoping to attract the big boys of the financial world. There could be nothing worse than sending the world a message that you are welcome to invest and lend to national economies, but that a blind eye will be turned when there is discrimination between national and international banks.
This is different from the so-called "too big to fail" syndrome, where national governments act, and have acted in the recent crises all around the world, to protect their key financial institutions to avoid panic and contagion to the wider financial sector. The Gulf did it. The Western world did it, as well.
For international bank creditors there are several options. First they can argue quietly, firmly and persuasively with the local Gulf financial regulators that having local settlements to the exclusion of international or "foreign" banks, is detrimental to these countries in the long run when these turn to the international capital markets to fund their mega projects.
A second option is to take the hit and lay low to avoid raising their profile. Another option, especially for those who have no physical presence or attachment to the Gulf, might be to go after the assets of the local banks who have reached bilateral settlements on the premise that their loans are pari-passu as the domestic banks and loan covenants have been breached.
This is a last option of the desperate and the only winners will be lawyers and financial forensic investigators. The domestic banks which reportedly are making such bilateral deals might consider themselves lucky in the short run, but they will sour their relations with international banks in the long run when they call them to participate in local mandates in the future.
Financial trust is an intangible commodity. After so many years of building up trust in the Gulf, let us now risk it for the sake of a few bilateral deals as the consequences could cost the region more.
To its credit the Saudi Arabian Monetary Authority has announced that it was not involved in any local settlement. And while welcoming any such settlements, it pointedly noted that the Saad accounts were still frozen.
Such announcements need to be more proactive and clear the air without having rumours take over and become de facto truths when the settlements already made could very well be perfectly legitimate.
Dr Mohamed A Ramady is a former banker and a visiting associate professor, Finance and Economics Department at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
The Two Popes
Director: Fernando Meirelles
Stars: Anthony Hopkins, Jonathan Pryce
Four out of five stars
Coffee: black death or elixir of life?
It is among the greatest health debates of our time; splashed across newspapers with contradicting headlines - is coffee good for you or not?
Depending on what you read, it is either a cancer-causing, sleep-depriving, stomach ulcer-inducing black death or the secret to long life, cutting the chance of stroke, diabetes and cancer.
The latest research - a study of 8,412 people across the UK who each underwent an MRI heart scan - is intended to put to bed (caffeine allowing) conflicting reports of the pros and cons of consumption.
The study, funded by the British Heart Foundation, contradicted previous findings that it stiffens arteries, putting pressure on the heart and increasing the likelihood of a heart attack or stroke, leading to warnings to cut down.
Numerous studies have recognised the benefits of coffee in cutting oral and esophageal cancer, the risk of a stroke and cirrhosis of the liver.
The benefits are often linked to biologically active compounds including caffeine, flavonoids, lignans, and other polyphenols, which benefit the body. These and othetr coffee compounds regulate genes involved in DNA repair, have anti-inflammatory properties and are associated with lower risk of insulin resistance, which is linked to type-2 diabetes.
But as doctors warn, too much of anything is inadvisable. The British Heart Foundation found the heaviest coffee drinkers in the study were most likely to be men who smoked and drank alcohol regularly.
Excessive amounts of coffee also unsettle the stomach causing or contributing to stomach ulcers. It also stains the teeth over time, hampers absorption of minerals and vitamins like zinc and iron.
It also raises blood pressure, which is largely problematic for people with existing conditions.
So the heaviest drinkers of the black stuff - some in the study had up to 25 cups per day - may want to rein it in.
Rory Reynolds
Business Insights
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- US domestic suppliers might benefit from higher prices, but overall oil consumption is expected to decrease due to elevated costs
Ammar 808:
Maghreb United
Sofyann Ben Youssef
Glitterbeat
Libya's Gold
UN Panel of Experts found regime secretly sold a fifth of the country's gold reserves.
The panel’s 2017 report followed a trail to West Africa where large sums of cash and gold were hidden by Abdullah Al Senussi, Qaddafi’s former intelligence chief, in 2011.
Cases filled with cash that was said to amount to $560m in 100 dollar notes, that was kept by a group of Libyans in Ouagadougou, Burkina Faso.
A second stash was said to have been held in Accra, Ghana, inside boxes at the local offices of an international human rights organisation based in France.
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UAE currency: the story behind the money in your pockets
The language of diplomacy in 1853
Treaty of Peace in Perpetuity Agreed Upon by the Chiefs of the Arabian Coast on Behalf of Themselves, Their Heirs and Successors Under the Mediation of the Resident of the Persian Gulf, 1853
(This treaty gave the region the name “Trucial States”.)
We, whose seals are hereunto affixed, Sheikh Sultan bin Suggar, Chief of Rassool-Kheimah, Sheikh Saeed bin Tahnoon, Chief of Aboo Dhebbee, Sheikh Saeed bin Buyte, Chief of Debay, Sheikh Hamid bin Rashed, Chief of Ejman, Sheikh Abdoola bin Rashed, Chief of Umm-ool-Keiweyn, having experienced for a series of years the benefits and advantages resulting from a maritime truce contracted amongst ourselves under the mediation of the Resident in the Persian Gulf and renewed from time to time up to the present period, and being fully impressed, therefore, with a sense of evil consequence formerly arising, from the prosecution of our feuds at sea, whereby our subjects and dependants were prevented from carrying on the pearl fishery in security, and were exposed to interruption and molestation when passing on their lawful occasions, accordingly, we, as aforesaid have determined, for ourselves, our heirs and successors, to conclude together a lasting and inviolable peace from this time forth in perpetuity.
Taken from Britain and Saudi Arabia, 1925-1939: the Imperial Oasis, by Clive Leatherdale
Company profile
Name: Dukkantek
Started: January 2021
Founders: Sanad Yaghi, Ali Al Sayegh and Shadi Joulani
Based: UAE
Number of employees: 140
Sector: B2B Vertical SaaS(software as a service)
Investment: $5.2 million
Funding stage: Seed round
Investors: Global Founders Capital, Colle Capital Partners, Wamda Capital, Plug and Play, Comma Capital, Nowais Capital, Annex Investments and AMK Investment Office
COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
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Essentials
The flights
Whether you trek after mountain gorillas in Rwanda, Uganda or the Congo, the most convenient international airport is in Rwanda’s capital city, Kigali. There are direct flights from Dubai a couple of days a week with RwandAir. Otherwise, an indirect route is available via Nairobi with Kenya Airways. Flydubai flies to Kinshasa in the Democratic Republic of Congo, via Entebbe in Uganda. Expect to pay from US$350 (Dh1,286) return, including taxes.
The tours
Superb ape-watching tours that take in all three gorilla countries mentioned above are run by Natural World Safaris. In September, the company will be operating a unique Ugandan ape safari guided by well-known primatologist Ben Garrod.
In the Democratic Republic of Congo, local operator Kivu Travel can organise pretty much any kind of safari throughout the Virunga National Park and elsewhere in eastern Congo.
Copa del Rey
Barcelona v Real Madrid
Semi-final, first leg
Wednesday (midnight UAE)
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65
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LUKA CHUPPI
Director: Laxman Utekar
Producer: Maddock Films, Jio Cinema
Cast: Kartik Aaryan, Kriti Sanon, Pankaj Tripathi, Vinay Pathak, Aparshakti Khurana
Rating: 3/5
Women & Power: A Manifesto
Mary Beard
Profile Books and London Review of Books
Naga
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Expo details
Expo 2020 Dubai will be the first World Expo to be held in the Middle East, Africa and South Asia
The world fair will run for six months from October 20, 2020 to April 10, 2021.
It is expected to attract 25 million visits
Some 70 per cent visitors are projected to come from outside the UAE, the largest proportion of international visitors in the 167-year history of World Expos.
More than 30,000 volunteers are required for Expo 2020
The site covers a total of 4.38 sqkm, including a 2 sqkm gated area
It is located adjacent to Al Maktoum International Airport in Dubai South
Jawan
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'The Last Days of Ptolemy Grey'
Rating: 3/5
Directors: Ramin Bahrani, Debbie Allen, Hanelle Culpepper, Guillermo Navarro
Writers: Walter Mosley
Stars: Samuel L Jackson, Dominique Fishback, Walton Goggins
The%20specs
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Ticket prices
- Golden circle - Dh995
- Floor Standing - Dh495
- Lower Bowl Platinum - Dh95
- Lower Bowl premium - Dh795
- Lower Bowl Plus - Dh695
- Lower Bowl Standard- Dh595
- Upper Bowl Premium - Dh395
- Upper Bowl standard - Dh295
The figures behind the event
1) More than 300 in-house cleaning crew
2) 165 staff assigned to sanitise public areas throughout the show
3) 1,000 social distancing stickers
4) 809 hand sanitiser dispensers placed throughout the venue