Souq.com expects to double its sales during this year’s annual event, compared with its 2014 editionNovember 25, 2015 9:59
Arab Bank Chairman Quits Over CEO Dispute
Key shareholders withdrew support for Shoman-bankers; "bank cannot be run as Shoman family store"; Shoman circulates memo inside bank announcing resignation
August 19, 2012 8:43 by Reuters
The chairman of Arab Bank , Jordan’s biggest lender, resigned on Thursday after a long dispute with the chief executive over how the bank was run.
Abdel Hamid Shoman, whose family founded the bank in Jerusalem, announced his resignation in an internal company document seen by Reuters.
Sources at the bank, one of the Middle East’s largest financial institutions, said shareholders refused to back Shoman in a power struggle with CEO Nemah al-Sabbagh.
A shareholder, who attended a meeting with Shoman this week, said al-Sabbagh had complained that non-executive Shoman was interfering in decision making.
In a memo sent to bank staff, signed by Shoman, his wife and daughter, he said: “We refuse to be part of a bank which has strayed from the founder’s vision for it.” The other family members also resigned from the board.
The firm is one of the Arab world’s largest privately owned banks. Over 20 percent is owned by the family of Lebanon’s former prime minister, Rafik al-Hariri, who was assassinated in 2005, while a 15.5 stake is held by Jordan’s social pension fund.
The Shoman family owns 5 percent.
Based in Amman but with only a fifth of its assets and a quarter of its deposits in Jordan, the bank has built a reputation for stability amid regional political upheaval.
Jordan’s Central Bank (CBJ) governor Ziad Fariz said he had confidence in the financial strength and soundness of Arab Bank and said Shoman’s departure should not affect it.
“The bank is one of the leading Arab and national institutions which the CBJ supervises continuously as part of its regulatory role,” Fariz said.
Arab Bank, which has a $45.6 billion balance sheet spread across 30 countries on five continents, had no immediate comment.
A senior banker close to the affair said the dispute centred on the chairman’s powers and governance.
The banker said it was not acceptable that a “bank of the stature of Arab Bank should be run as a Shoman family store.”
A key shareholder who attended a meeting with Shoman this week and requested anonymity said: “We decided not to back Mr Shoman when the CEO complained he was interfering in the executive decision-making of the bank.”
Shoman had called a meeting of the board on Tuesday to complain about the CEO but was rebuffed, a board member said.
Another senior figure at the bank said Shoman resigned after the board rejected harsh criticism of Sabbagh by the chairman which was seen as overt interference in day-to-day operations.
“Key shareholders stopped Shoman. He was acting as an executive chairman so they took the side of the CEO,” the banker said.
The bank appointed deputy chairman Sabih al-Masri, one of Jordan’s most respected businessmen with large investments in the hotel industry, to take over from Shoman.
Other shareholders in Arab Bank, which owns 40 percent of Saudi Arabia’s Arab National Bank ANB, include the Saudi finance ministry with 4.5 percent and Qatar with 1.65 percent.
Investment analysts say the bank has traditionally had a lower risk appetite than peers.
Despite the regional downturn, its traditionally loyal Arab customer base raised deposits by more than 3.6 percent to $32 billion at the end of June 2012 against the same period last year. (Reporting by Suleiman Al-Khalidi; Editing by Erica Billingham and David Cowell)