End of easy credit for Gulf's mighty family businesses

From selling ice cream to building petrochemical plants, the big Gulf families dominate the region’s commercial landscape and have long traded on their reputation.
But that is now being questioned for the first time as bankers reassess so-called “name lending” to Gulf-based family conglomerates in the wake of the crisis surrounding Saudi Arabia’s Saad and Al Gosaibi groups.

Many banks, including the international giants BNP Paribas and Citigroup and local institutions such as Abu Dhabi Commercial Bank, Mashreqbank and First Gulf Bank, have admitted being exposed to the two Saudi groups, both of which are undergoing massive debt restructurings.

“Almost every single bank we talk to in the UAE is seeing an increased occurrence of renegotiating and restructuring loans, often with family-owned businesses,” says Mardig Haladjian, who heads GCC banking coverage for Moody’s Investors Service.
Now analysts and investors across the Gulf are asking why some families have been permitted to accumulate an apparently unsustainable burden of debt.