Saudi Banks Raised at Credit Suisse After Saad Deal

Saudi Arabian bank stocks were upgraded at Credit Suisse Group AG, which said historically low valuations and an agreement to refinance debt owed to the banks by Saad Group will spur investor confidence.

Samba Financial Group, Saudi British Bank, Al-Rajhi Bank and Riyad Bank were raised to “outperform” from “neutral,” Credit Suisse London-based analyst Mohamad Hawa wrote in a research note today. Banque Saudi Fransi and Arab National Bank were upgraded to “neutral” from “underperform.”

Saad, which has interests in construction, finance and real estate, has been given more time to pay about 10 billion riyals ($2.7 billion) to a group of mainly local creditors after its default, a person familiar with the accord said last week. The deal may lure investors back to bank shares trading at a 67 percent discount to their five-year average price-to-book ratio and a 48 percent discount to the average price-to-earnings ratio, Hawa wrote.

A career as a holistic adviser

Paul Reynolds has seen his share of collapses. His first was at the investment bank Barings in February 1995. Disappointed about their bonuses, Mr Reynolds and his colleagues complained to the directors, who convened in a separate room and never came back. A day later, Barings was bankrupt following huge losses by an individual trader.

Thirteen years later, in September last year amid the world financial crisis, the 41-year-old investment banker had just been promoted to lead Rothschild’s equity and debt advisory in the Middle East. He arrived to a makeshift office in Dubai. “I had nothing in my office, no news terminal, nothing. The world around me was collapsing and I could not follow it on a screen.”

Through these ups and downs, Mr Reynolds has found a way to anchor his banking practice through skills he honed in his 30-plus years sailing: patience, an attention to detail and an ability to think on his feet.

China awarded first Abu Dhabi oil rig deal

A Chinese state oil firm has for the first time won an oilfield services contract in Abu Dhabi, in a sign of deepening commercial ties between the world’s second-biggest energy consumer and Gulf oil exporters.

National Drilling Company, the drilling unit of the Abu Dhabi National Oil Company (ADNOC), said on Thursday it had awarded an Dh800 million (US$218m) contract to -Baoji Oilfield Machinery, a subsidiary of the China National Petroleum Corporation (CNPC), to supply oil rigs for onshore drilling.

The deal closely follows last month’s visit to China by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, to foster strategic co-operation with Beijing.

ADIA files claim against Lehman

The Abu Dhabi Investment Authority (ADIA) is among a group of international creditors to file claims against the collapsed US investment bank Lehman Brothers.

ADIA is seeking payments from US$610 million (Dh2.24 billion) it held in commercial paper purchased in the weeks before Lehman’s failure. The debt, which yielded around 2.9 per cent, was due to mature just weeks after Lehman’s bankruptcy filing.

Filing claims alongside Abu Dhabi’s sovereign wealth fund were major financial institutions including the UK’s Barclays Bank and US bank Morgan Stanley, according to the claims administrator’s website.

Banks need closer watch, says DIFC

The Gulf needs a new regional supervisory framework for banks that goes beyond measures being discussed by world leaders in Pittsburgh, according to the chief economist of the Dubai International Financial Centre (DIFC).

Barack Obama, the US president, and his counterparts in the Group of 20 (G20) developed and emerging nations gathered in the US city on Thursday to discuss a plan to reform the global financial system and force banks to reduce leverage to avoid a repeat of the worst financial crisis in 70 years.

The fallout from the debt restructuring of the Saad and Al Gosaibi groups of Saudi Arabia has shown that the Gulf region would benefit from a regional framework for regulation, said Dr Nasser Saidi, the DIFC chief economist.

Fitch downgrades seven UAE banks (Analysis)

The credit ratings of seven lenders in Dubai, Sharjah and Ras al Khaimah were downgraded on Thursday by Fitch, as the ratings agency expressed doubts over future UAE support.

The move was triggered by concerns over the ability of the Government and the emirate of Dubai to provide assistance to their banks even though their “willingness” to do so was undiminished.

The downgrade covered Bank of Sharjah, Commercial Bank of Dubai, Dubai Bank, Emirates Bank International, Mashreqbank, National Bank of Ras al Khaimah and Tamweel, the home-finance company.Fitch said the downgrades reflected increasing stress on the Government of Dubai and the Central Bank as they try to finance the restructuring of roughly US$65 billion (Dh238.74bn) in debts owed by Dubai-controlled companies such as Dubai World.