Algosaibi's TIBC owes $2 bln to banks-source

MANAMA Oct 12 (Reuters) - Bahrain-based The International Banking Corporation (TIBC), owned by troubled Algosaibi Group, owes $2.07 billion to banks, and it is unclear if its assets can be recovered to pay creditors, a well-placed source said.

TIBC, owned by Saudi group Ahmad Hamad Algosaibi & Bros (AHAB), is part of a wrangle between AHAB and Saad Group [SAADG.UL], involving a debt pile estimated at $22 billion and that has shocked the Middle Eastern banking community.

The Central Bank of Bahrain (CBB) assumed control of TIBC and Saad Group's Bahrain-based Awal Bank in July 2009, and appointed external administrators to protect creditors' claims.

The administrators, law firm Trowers & Hamlins, prepared a statutory report on TIBC that it presented to the CBB and TIBC's creditors. The source familiar with the report said that the $2.074 billion TIBC owed to banks included about $300 million money market liabilities, $361 million foreign exchange transactions and structure trade finance deals worth about $1.4 billion.

Deutsche Bank (DBKGn.DE) and TIBC are battling in court over TIBC's failure to make good on its portion of two foreign exchange transactions, under which the German bank agreed to swap $59.8 million for 40 million pounds. [ID:nLN654421]

The source said TIBC holds assets worth $4 billion in its books, but that it was unclear whether these could be recovered to pay out creditors.

A spokesman for Trowers & Hamlins declined to comment. He said the administrators were in the process of realising the assets of TIBC.

The bank has 13 employees remaining, after it laid of a total of 28 in August and September. (Reporting by Frederik Richter; Editing by Andrew Macdonald)