AMMAN — In reaction to a decision by the
Standard Chartered bank earlier on Thursday to end its operations in Jordan, among other
countries, and to focus on markets that would generate more revenues,
economists and investors interviewed by Jordan News talked about the reasons
that make foreign banks leave and how that might affect the investment
environment.
اضافة اعلان
Bassam Hamad, a Jordanian investor and former head
of the
Jordanian Investors Association, told Jordan News that a number of banks
dominate the banking sector in the Kingdom, and, “at the same time, investments
in Jordan are not huge and foreign banks cannot compete with these dominating banks,
leading to less profits than expected”.
The departure of Standard Chartered from Jordan was
preceded by that of HSBC, which left Jordan three years ago, according to
Hamad. He also pointed to the recent Capital Bank’s acquisition of the Audi
Bank.
Hamad contended that the Standard Chartered decision
to exit Jordan will not affect the investment environment.
“It is true that Jordan has a huge number of banks,
but there is little competition between them since they all adhere to the
Central Bank’s laws and regulations,” he said.
Hamad said that for an industrial bank to succeed in
Jordan, it needs to be supported by the government, “otherwise it would just be
an entity that lends money to employees in the industry sector at the same
interest rates offered by other banks”.
Jordan lost the Industrial Development Bank because
it was not supported, he said.
Former general manager of the Association of Banks
in Jordan
Adli Kandah told Jordan News that Standard Chartered is one of the
oldest banks in Jordan, and their pulling out of Jordan could be related to
poor profits or other reasons.
He added that the Jordanian banking sector is one of
the best and relatively profitable sectors in the region, and that it operates
in an open and competitive environment, in accordance with the applicable laws
and regulations.
“I would like it if Standard Chartered kept
operating in Jordan, but its exiting the market will not affect the investment
environment since Jordanian banks provide the same services, such as facilities
and funding, as foreign banks,” Kandah said.
“I hope a Jordanian bank will acquire the operations
of Standard Chartered here before it exits the country, which is most probably
what is going to happen,” he added.
According to Kandah, foreign banks will be
encouraged to invest in Jordan if they witness a highly competitive
environment. Yet, even though foreign banks in Jordan used to have a big share
of the market collectively — reaching sometimes up to 20 percent — some decided
to end their operations in Jordan.
Kandah added that
a report on the comparative performance of banks operating in Jordan, which is
issued annually by the
Association of Banks in Jordan, showed that “profits of
foreign banks were not low”.
“We should conduct studies on whether these banks
make more profits outside Jordan or not,” he said.
He also said that that more banks might exit Jordan
while others might open branches, since it is an open market.
“The banking sector has long reached a level of
professionalism, providing various services that cover market needs, either of
local or of foreign investors. Therefore, there are no concerns about this
sector,” he said.
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