Saudi bank sells silver after chief resigns

THE PRICE of silver plunged to its lowest level of the year yesterday amid reports that the National Commercial Bank of Saudi Arabia had sold dollars 80m ( pounds 42m) worth of silver in just two hours.

The price fell from dollars 4.06 an ounce to dollars 3.82 in London, sparking a similar movement in silver futures on the New York Commodity Exchange, after the Saudi bank unloaded at least 622 tonnes of the metal.

Analysts connected the enormous sale with the announcement yesterday that Sheikh Khalid bin Mahfouz, the National Commercial Bank's chief operating manager, had resigned after being charged with offences connected with the collapse of the Bank of Credit and Commerce International.

Sheikh Khalid was charged by a grand jury in New York last week with defrauding more than dollars 300m from BCCI depositors.

A statement issued in Bahrein yesterday said that Sheikh Khalid was devoting his energies to fighting the allegations against him. He denied the charges as 'completely unwarranted and without justification', but could not allow the smooth operation of the bank to be interfered with.

The allegations, made by Robert Morgenthau, the district attorney, are that Sheikh Khalid and an associate, Haroon Kahlon, pumped hundreds of millions of dollars into BCCI in 1986 and then secretly withdrew it, creating a false impression of BCCI's financial health and making a profit of almost dollars 140m.

The two men face up to four years' jail and fines of dollars 600m.

The National Commercial Bank is primarily owned by Sheikh Khalid's father, Salem Ahmad al- Mahfouz. The bank has not published results since 1989, but is under no obligation to do so under Saudi law.

Last Wednesday, the day after the charges were announced in New York, the National Commercial Bank's branch in London closed its doors to the public. The bank denied there was any connection between the two events.