New York Branch of Saudi Bank Ordered to Close

Federal regulators ordered the New York branch of Saudi Arabia’s biggest bank to close, charging that the bank was involved in the ever-widening Bank of Credit & Commerce International scandal.

The National Commercial Bank of Saudi Arabia on Thursday angrily protested the move, accusing the Federal Reserve Board and the Comptroller of the Currency of using it as a scapegoat in the BCCI scandal.

“Today’s precipitous action . . . is a manifestation of their sheer frustration at having failed in the past to detect the frauds of BCCI,” the bank said.

The order to shut down came a day after the Federal Reserve said it is seeking a $170-million fine against Sheik Khalid bin Mahfouz. The Fed accused Sheik Khalid, a major investor in BCCI, and National Commercial Bank of secretly buying a stake in First American Bankshares, a large Washington, D.C., bank with the help of BCCI.