By Suleiman al-Khalidi
UPDATE 1: New board elected nearly two months after central bank ousted chairman.
Jordan's Capital Bank elected a new board, nearly two months after an unprecedented central bank step that ousted its chairman and took over its management, bankers said on Tuesday.
The bankers said an extraordinary annual meeting of
's major shareholders approved a new board that excluded its former chairman, leading Iraqi investor Hassan Kubba, who was replaced by Samih Darwazah, the founder of Hikma Pharmaceuticals PLC, and a major investor in the bank.
The Central Bank of Jordan's (JCB) move in July to dissolve the bank's board sent shockwaves through a conservative banking sector unaccustomed to draconian measures against an incumbent chairman of a solvent and financially sound bank, whose shareholders are among the country's leading industrialists.
Kubba, a scion of an old merchant family which own Iraq's Basra International Bank for Investments, had built a 51 percent holding along with Arab partners in the bank, whose assets exceed 984 million dinars ($1.39 billion) after buying out leading Jordanian investors in January.
The move against a prominent Iraqi investor who had poured tens of millions of dollars of funds into Jordan in recent years dented investor confidence and briefly triggered panic selling in recent weeks on the Amman bourse by investors fearful it could prod Iraq's influential business community to divest.
's general manager, Haytham Kamhiya, said the new board's composition would restore depositors' confidence shaken by the developments.
"This will enhance governance and we see this bringing a quick recovery and restoring liquidity and deposit levels and raising them higher," Kamhiya told Reuters.
Central Bank governor Ummaya Toukan said at the time the move was prompted by violations and acrimony among board members that, had they persisted, would have hurt the banking system.
Toukan also said the bank's deposits were not only assured because of a government move last year to guarantee all deposits in the Jordanian banking sector, but because its financial position was healthy and it enjoyed high liquidity.
Official sources say the CBJ was worried about Kubba's moves to extend loans to his Iraq business affiliates, including relatives, without sufficient collateral, at a time of turmoil when banks were suffering from the impact of the global downturn.
Kubba told Reuters he only sought to position
, which focussed on trade and corporate finance, to capture the lion's share of the lucrative trade finance market in Iraq through extending over $450 million of credit facilities.
After the central bank intervention, Kubba was pushed to reach a deal with the authorities to reduce his majority holding and relinquish control of the board. His partners now retain only two seats in a newly composed 11-member board, even though he remains the single largest investor with a 30 percent stake. (Reuters)