Oman's Bank Muscat is likely to book provisions during the second quarter on its exposure to troubled Saudi groups Saad and Al-Gosaibi, an analyst said on Wednesday. A spokesman for Bank Muscat declined to comment.

The note by Sunil Dhall, vice-president of Gulf Baader Capital Markets, is the latest sign the Saudi groups' problems could affect banks across the Gulf region.

Saad Group, a $30 billion empire chaired by billionaire Maan Al-Sanea, is restructuring its debt, including that of its Bahrain-based subsidiary Awal Bank, after ratings agencies downgraded the group to default status.

"The Bahrain subsidiary (Bank Muscat International) had exposures to Saad Group and Al-Gosaibi," Dhall said in a note.

"Central banks are likely to ask them to classify that as bad debt. In case things improve, they can write it back."    

Dhall said he expected shares in Bank Muscat to fall below 0.700 rials if such an announcement is made by the bank.

Shares in the bank closed up 1.2 percent at 0.765 rials in a generally higher market.

Saudi group Ahmad Hamad Al Gosaibi Group & Brothers (AHAB), which owns a majority stake in Bahrain-based The International Banking Corporation (TIBC), is also restructuring its debt.

Investors have been kept guessing by both groups, who have released very little information on their debt restructuring.

Analysts said it was still difficult to estimate to what extent other banks in Bahrain and the region could be forced to book provisions on their exposures to these groups.

One Bahrain-based analyst said there could be more exposures at other banks in the country, but these would take time to surface. "I'm not sure we would see them in the second quarter, they could also be booked in later quarters," he said.

Kuwaiti analysts said banks there were tight-lipped about possible exposures to the Saudi groups, but they expected them to book only minor provisions.

"No one is actually speaking about it -- as to who has exposure," said Naveed Ahmed, a financial analyst at Kuwaiti investment bank Global Investment House. - Reuters