Isam H. Salfiti,
Chairman
of Union Bank |
As the man responsible for the state of the American
dollar, the aftermath of Allan Greenspan’s
departure as Chairman of the US Federal Reserve
is being watched world wide, including by the financial
decision-makers in Jordan. "We are very much
connected to the market," said Isam Safiti,
chairman and general manager of one of this country’s
largest banks. The moustachiod Salfiti, in smart
round glasses and a gregarious deportment, claims
that every time Greenspan raised interest rates
by a quarter of a percentage point it’s impact
upon the Jordanian market was less immediate than
it was on the Central Bank. "Our Central Bank
raised interest rates every time Greenspan did,"
said Salfiti. "Whenever Greenspan said something—the
whole world reacted."
Last year was a booming year for profits in Jordan,
including in the banking industry. Despite a set
back in early March in the Jordanian stock market,
and somewhat higher interest rates, Salfiti anticipates
another good year owing to the fact that all the
elements are in place for continued growth.
The four and a half point drop in the market is
nothing more than an overdue correction says Salfiti,
who believes that a measure of uncertainty over
the near term political situation in the region
is what initiated the sell off. A few days after
the correction in the market, stocks had rebounded.
Although it is small, even by regional standards,
the presence of an exchange reinforces Jordanian
influence as a banking and financial center.
Depending on whom you ask, there is, in Jordan,
something in the neighborhood of twenty- three banks.
Most financial experts believe that this is too
many. "I believe Jordan is very over banked,"
said Salfiti, citing the example of how one bank
alone has over 130 branches in this nation of less
than six million people, while yet another operates
about 80. The prevailing wisdom in Jordan is that
consolidation is needed so as to bring the numbers
down. Too much competition leads to lower profits.
The Union Bank headquarter
in Amman |
As evidenced by the number of banks that are operating
here, the Jordanian banking sector is considered
to be quite dynamic. The country is also viewed
as offering a liberal environment in which to operate.
Approximately five of the institutions in service
here are subsidiaries of foreign banks, three of
them from the West—HSBC, Standard Chartered
and Citigroup. Moreover, five others are serving
as investment banks, although their activities differ
little from most commercial banks, and four other
organizations are in place specializing in agricultural
loans (Agricultural Credit Corporation), industrial
lending (Industrial Development Bank), housing (Beitna),
as well as rural development (Cities and Villages
Development Bank).
Like financial institutions the world-over, the
banking industry is changing as economic liberalizations
take hold and banks, such as Salfiti’s Union
Bank, seek growth. Union Bank was initially a finance
company that evolved into a bank in 1992. The banks
specialization today is in money exchange. For the
most part Salfiti considers his bank as a boutique
company, giving special attention to clients. The
emphasis now is in bringing the bank to the next
level, seeing it grow into a larger entity than
it is today.
Although an evolution is taking place, and the
banking sector continues to grow, the prevailing
sentiment is that the government tax rate on banking
is higher than it need be—higher than any other
sector of the economy, according to Salfiti. A deep
seeded image problem seems to be a part of what
needs to be overcome, as it was not all that long
ago that people tended to look after their money
themselves rather than rely on institutions. To
counter this the industry is planning a public relations
campaign that aims to educate both the population
at large as well as government officials.
|
Jordan 
