Bahrain has placed restrictions on the kingdom-based banking units of two troubled Saudi firms but has not frozen their assets, the central bank governor said.

Awal Bank, which is controlled by Saudi conglomerate Saad Group, and The International Banking Corporation, a unit of Ahmad Hamad Al Gosaibi Group and Brothers, are prohibited from transferring funds without central bank approval, Rasheed Al Maraj said.

The restrictions on the two units from Central Bank of Bahrain (CBB) come after the Saudi Arabian Monetary Agency earlier this month froze several accounts linked to the owners of the family-owned Saudi groups.

Both firms have said they are restructuring their debt, with bankers putting the amount at around $10 billion. In the past week, a number of Gulf banks have announced varied levels of exposure to the troubled businesses.

"The two firms cannot currently transfer any funds without the approval of the central bank. This is the most important restriction we have placed on them," Al Maraj was quoted as saying in our sister publication, the Gulf Daily News.

"What happened in these banks emerged at the end of last April. According to the periodic reports we receive from banks, there were no signs of the irregularities that were to emerge later on and which required the intervention of the central bank," he said.

"When we learnt about the issue at the beginning of May, we imposed the restrictions I have mentioned."

The CBB also sent officials to inspect the situation at the two units.

The problems at Saad Group and Ahmad Hamad Al Gosaibi have underscored growing risks for the Gulf region, which has been battered by the financial crisis.

Dubai Islamic Bank has no exposure to two troubled Saudi conglomerates, a spokesman said.

"Dubai Islamic Bank has confirmed that it has no exposure to either party," the spokesman said when asked about its business with Saad Group and Ahmad Hamad Al Gosaibi. – TradeArabia News Service