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An Intercreditor Agreement sets the ground rules between multiple lenders who provide financing to the same borrower in Saudi Arabia. It clearly spells out each lender's rights, priorities for repayment, and their ranks in claiming assets if the borrower defaults. Think of it as a roadmap that helps lenders work together smoothly while protecting their interests.

In the Kingdom's growing project finance and Islamic banking sectors, these agreements play a crucial role when different banks join forces on major developments. They determine who gets paid first, who can take action against the borrower, and how to handle shared collateral—all while staying compliant with Shariah principles and Saudi commercial banking regulations.

Use an Intercreditor Agreement when multiple lenders plan to finance the same Saudi project or borrower, especially in large infrastructure developments, real estate ventures, or corporate expansions. This becomes essential before finalizing any multi-bank financing where lenders need clear rules about their rights and priorities.

The agreement proves particularly valuable in complex Shariah-compliant financing structures, joint ventures with international banks, or when mixing conventional and Islamic facilities. Getting this in place early helps prevent disputes between lenders, streamlines enforcement actions, and creates a clear hierarchy for both security interests and payment rights under Saudi banking regulations.

• First Lien/Second Lien: Common in Saudi real estate and construction financing, establishing clear payment priorities between senior and junior lenders
• Senior/Mezzanine: Used in corporate financing, particularly when combining conventional and Islamic facilities under Saudi banking laws
• Bilateral/Syndicated: Coordinates multiple lenders in large project financings, defining voting rights and collective action procedures
• Islamic/Conventional Hybrid: Structures relationships between Islamic and conventional banks while maintaining Shariah compliance
• Project Finance: Tailored for major infrastructure projects, addressing step-in rights and complex security arrangements

• Lead Banks: Typically major Saudi or international banks who initiate and structure the financing, often taking primary responsibility for drafting the Intercreditor Agreement
• Islamic Finance Institutions: Shariah-compliant lenders who ensure the agreement aligns with Islamic banking principles
• Legal Counsel: Saudi-licensed lawyers who draft and review terms, ensuring compliance with local banking regulations
• Corporate Borrowers: Companies or project developers who must acknowledge and comply with the lenders' arrangement
• SAMA Officials: Saudi Central Bank representatives who may review agreements for compliance with banking regulations

• Lender Details: Gather full legal names, registration numbers, and authorized representatives of all participating banks and financial institutions
• Financing Structure: Document each lender's commitment amounts, facility types, and Shariah compliance requirements
• Security Package: List all collateral, guarantees, and security interests, ensuring alignment with Saudi secured lending laws
• Payment Hierarchy: Define clear payment priorities, waterfall structures, and enforcement rights among lenders
• Regulatory Compliance: Confirm adherence to SAMA guidelines and obtain necessary regulatory approvals
• Enforcement Mechanics: Specify voting rights, decision-making thresholds, and dispute resolution procedures

• Parties Section: Complete legal names and roles of all lenders, agents, and security holders under Saudi law
• Priority Rights: Clear ranking of payment and security rights, including Shariah-compliant distribution mechanics
• Enforcement Provisions: Detailed procedures for collective action, standstill periods, and security enforcement
• Payment Waterfall: Specific order of payments and distribution among creditors following Saudi banking regulations
• Dispute Resolution: Saudi arbitration or court jurisdiction clauses aligned with local enforcement requirements
• Amendment Process: Clear procedures for modifications requiring specified majority consent
• Governing Law: Express choice of Saudi law and compliance with Shariah principles

An Intercreditor Agreement differs significantly from an Agency Agreement in both scope and purpose within Saudi Arabia's banking sector. While both documents govern relationships between financial parties, their core functions and applications are distinct.

• Primary Purpose: Intercreditor Agreements manage relationships between multiple lenders sharing the same borrower, while Agency Agreements establish one party acting on behalf of another in financial matters
• Party Structure: Intercreditor Agreements involve multiple lenders at different priority levels, whereas Agency Agreements typically involve just two main parties - principal and agent
• Enforcement Rights: Intercreditor Agreements detail collective enforcement procedures and security sharing, while Agency Agreements focus on the agent's authority limits and duties
• Shariah Compliance: Intercreditor Agreements must address complex Islamic finance priorities, while Agency Agreements (Wakala) follow simpler Shariah agency principles