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Tue 17 May 2011 09:13 AM

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Jordan's Arab Bank rules out near-term acquisitions

Abdel Hamid Shoman says focus will stay on MENA, warns of ‘difficult year’ for local sector

Jordan's Arab Bank rules out near-term acquisitions
Arab Bank executive chairman Abdul Hamid Shoman has warned of a "difficult year" ahead

Arab Bank, one of largest privately-owned finance houses in the Middle East, is not planning to expand via acquisition in the near future, its chairman said.

“Since our capital is considered sacred and is expensive to replenish, we will deploy it to our valued customers or to promising new clients for the time being, versus buying assets for yield purposes,” Arab Bank executive chairman Abdel Hamid Shoman told Arabian Business.

Shoman also said that the bank would continue to focus on the MENA region, rather than expanding its network further abroad.

The Amman-based bank is operational in 30 countries, with a network of 500 branches.

“We will continue to focus on the MENA region and strengthen our network and overall financial position here, before seeking any expansions,” he said. 

“However, should the right opportunity present itself in terms of a good fit, the right time, the right price, and with great added value, we have no problems considering it.”

Arab Bank posted $468.8m in net profit before tax and after provisioning in 2010.

Assets, however, rose from $50.5bn to $51.1bn, while the bank’s capital adequacy ratio sits at 15 percent.

“2011 will be a difficult year for the banking industry in the region, due to the current events we are witnessing,” Shoman added. 

“Therefore, we will continue to also focus on compliance and risk management, upgrading and enhancing our standards while efficiently adapting and responding to current events.”

The Jordanian banking sector has fared comparatively well during the financial crisis, with all 15 of the country’s major finance houses posting a profit during 2009, the toughest year for the sector.

However, Shoman said that the local industry could face consolidation if the Central Bank raised minimum capital requirements.

“I expect mergers to happen in the near future not only due to capital requirements, but also the high competition that the industry experiences,” the chairman said.

“Such has happened in larger countries in Europe and in the US. I believe that consolidation would be healthier for the industry.”

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