Saudi Arabia’s banks have $5bn exposure to defaulting local family conglomerates Saad Group and Ahmad Hamad al-Gosaibi & Brothers (Ahab), according to a report by the UK’s Standard Chartered.

The report says although this exposure is significant, “most of the banks’ financial profiles remain sound”.

Defaults at the two family groups have turned into a legal row between them, and Ahab claims that Maan al-Sanea, owner of the Saad Group, used falsified documents to obtain loans against Ahab or its subsidiaries.

Despite this issue, Singapore-based senior credit analyst at Standard Chartered Victor Lohle, says the Saudi banking sector has strong fundamentals particularly because of their “large pool of unremunerated deposits”.