Saudi Arabia’s Saad Group has reached an agreement with its Saudi creditors, according to the governor of the Saudi Arabian Monetary Agency (Sama).

“This is an agreement between the creditors and the borrower, and my understanding is they have agreed to settle,” says Muhammad al-Jasser, governor of Sama.

Saad Group and another local family group, Ahmad Hamad al-Gosaibi & Brothers, have defaulted on about $20bn debts.

The UK’s HSBC estimated in July that Saudi banks had up to $7bn exposure to the two groups.

Although the settlement is a positive move for local banks, international banks have become concerned about a two-tier process that results in them being dealt with separately.

“We are very concerned about Saudi banks being dealt with differently to other creditors and getting preferential treatment,” says a banker at a European institution with exposure to the two firms.