UBS has got itself into a royal pickle in Kuwait. The Swiss bank is fighting a claim that it failed to pay a local sheikh for helping it secure the $10.7 billion sale of the African subsidiary of part state-owned telecom operator Zain.

UBS denies that it entered into any contract with the sheikh.

Sheikh Meshal Jarah al-Sabah, a former head of Kuwaiti state security and member of the royal family, says he had a verbal agreement that UBS would pay him between 0.1 and 0.2 percent of the total sale value. He claims UBS was paid a fee of $60 million for its role as lead advisor on the transaction.

It is not uncommon for banks in the Middle East to give away up to 30 percent of their fees to a prominent local intermediary. But a written contract is usually a pre-requisite. Besides, UBS had advised Zain on previous deals and hardly needed an introduction to the firm.

Moreover, the fee the sheikh claims UBS received - equivalent to 0.6 percent of the deal's value - looks high for a region known for driving a hard bargain with investment bankers. UBS says it earned $22.5 million, or 0.2 percent of the deal's value, which is closer to the average for Middle East transactions, according to Freeman, a merger consultancy.

The embarrassment for UBS is the lengths to which it went to accommodate the royal. It confirms in the court papers that it invited the sheikh to formally apply for a non-executive job at the bank. As part of that process, the bank says it granted the sheikh separate meetings with two of UBS' top global investment bankers which took place after the Zain deal was agreed in 2010.

The sheikh ultimately ended up as an adviser to an unnamed Russian telecom firm, understood to be Vimpelcom, on its operations in Algeria - a recommendation he claims was made by UBS shortly after the verbal agreement.

It is impossible to say what impact the public spat will have on UBS' business. - By Una Galani. (The author is a Reuters Breakingviews columnist. The opinions expressed are her own)