Shares in Prince Alwaleed’s firm soar, but banks remain cautious

Saudi Arabian billionaire Prince Alwaleed bin Talal sits to have an interview with Reuters at work from the suite when they have been detained along at the Ritz-Carlton in Riyadh, Saudi Arabia January 27, 2018, REUTERS/Katie Paul

DUBAI (Reuters) – Prince Alwaleed bin Talal’s freedom has sent shares of his flagship company soaring, but banks will cautious about addressing his company until they\’ve got more clarity for the circumstances of his release with a corruption probe.

Shares in Saudi Arabian investment firm Kingdom Holding <4280.SE> rose sharply in early trade on Monday to above their level when owner Alwaleed was detained while in the country’s corruption probe in early November.

The stock climbed 5.6 % to 10.60 riyals, after jumping Ten % on Sunday. They had been at 10.28 riyals before Prince Alwaleed was detained.

The prince was released from detention for the weekend and Saudi officials said he previously keep ownership of the company.

Prince Alwaleed – whose net worth have been estimated by Forbes magazine at $17 billion – would be the face of Saudi business for foreign investors. Before his detention, he appeared frequently on international news channels and was featured in newspaper articles about his investments and lifestyle.

Bankers said hello was inevitable that banks will be extremely watchful about handling Kingdom. They should be clearly understand around the way forward for the company’s ownership after Alwaleed\’s release.

“Some banks will endeavour to limit the bond, to stop reputational damage,” said a banker in Saudi Arabia, who asked to not be named.

But he said banks have to know whether any official settlement came about this is if you are seeking decision.

Officials at Kingdom are not available to comment.

A corruption settlement or tax amnesty by clients might trigger anti-money laundering checks at banks, which might potentially affect client relationships.

Alwaleed’s detention had started to affect his company’s relationship with banks, which became cautious in lending towards the group because of worries about potential repercussions.

Kingdom had approached banks to gain access to money to advance new investments, but the financing plan occurred up, Reuters had reported in November citing sources.

Kingdom has two outstanding term loans totaling $975 million and maturing within the next 2 yrs, reported by Thomson Reuters data. At the end of the next quarter not too long ago, the organization experienced a debt to equity ratio of only 0.45.

A senior Saudi official said on Saturday billionaire Alwaleed was published after a settlement he or she concluded with authorities was authorized by the attorney general.

“The production of Prince Alwaleed bin Talal plus a variety of other high-profile individuals may ease some concerns, but we still do not have any exactly which kind of agreement they have got reached using the authorities,” Jason Tuvey, Middle East economist at Capital Economics within london.

“It boosts the murkiness around the whole process.”

In an enhancement unrelated to Alwaleed’s detention, Kingdom’s chief financial officer Mohamed Fahmy is leaving the firm, Reuters reported earlier this year, citing sources knowledgeable about the problem. He was considered a detailed aide from the Saudi billionaire.

(additional reporting by Alexander Cornwell and Andrew Torchial; Writing by Saeed Azhar, Editing by William Maclean)

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