It is the Arab Bank

تم نشره في Sun 26 October / Oct 2014. 06:52 PM - آخر تعديل في Mon 27 October / Oct 2014. 11:44 AM

By Jumana Ghunaimat

Since the initial verdict against the Arab Bank in the lawsuit filed in New York courts, claiming that the bank finances terrorism, the Bank’s shares saw a decline at a ratio of approximately 4.5%. The stock declinedfrom 7.70 dinars to 7.36 dinars with the closing of the stock market last week.

This decline was the result of the sale by stock holders, mostly individuals and small shareholders in the bank. Their decision to sell was driven by fears of the possibility of the share price tumbling after the US judicial decision. Even if such action is natural, it reflects poor assessment of the situation of the Arab Bank, as the bank is still achieving profits, at rates comfortable for investors, and it announced yesterdaya 614.2 million dollars growth in the first nine months of 2014, at a 10% growth rate.

The numbers show that trading on the Arab Bank’s share is not massive. The purchase is mostly done by the Abdul Hameed Shoman Foundation, PADICO, the social security investment fund, as well as other Arab investors.

The vital question is: Do you think the sale of the Arab Bank’s shares isthe right decision?

On the very near term, it may seem to the observer that selling is the right decision. But it's definitely a hasty decision on the medium and long term. An established, national institution as the Arab Bank is capable ofovercoming the crisis, even if, as we do not expect nor hope, the Bank’s appeal against the court decision fails.

The bank put forth several scenarios to deal with the crisis, including the worst, which is to pay the fine in the end scenario and provisions were allocated for this over the next five years.

Hence, supporting the Arab Bank, and maintaining the stability of its stock, becomes national duty too; especially that investing in the shares of this bank is a financially sound move, supported by the statements of its Chairman Sabih Masri, who confirmed that the bank has a sound legal position during the appeal, which is expected to continue for a year at least.

Also, the ill-considered decisions is detrimental to Social Security and its financial portfolio; if the Arab Bank’s stock recedes by one dinar,it will inflict large losses, albeit on the books only, to the Social Security’s portfolio, losses estimated at 80 million dinars.

Additionally, even from a purely financial standpoint, the retention of the Arab share, and procuring it as an investment, is a winning strategy as demonstrate by the bank's assets and potential.

The Arab Bank has a well-established financial institutionthat is also a part of the history of this country, and is older than eight decades. The Arab Bank has booked itself a prominent place among global banks, not to mention Arab and local ones. Those who hold shares of this bank need to remember that it can cope with difficulties and pressures.

The bank has passed the bottleneck stage, which is the issuance of the initial ruling, and is therefore inevitably able to overcome the rest through togetherness and faith in a national institution that plays a role far beyond that of a traditional bank.



This article is an edited translation from the Arabic edition.