 |
When Nemeh Sabbagh joined as Arab Bank’s CEO from Lebanon’s BankMed in 2010, early progress was not always smooth. Appointed as a long-term successor to group chairman (and at the time CEO) Abdel Hamid Shoman, the two did not always see eye to eye on Sabbagh’s methods. Shoman, the founder’s grandson, resigned as chairman with three other members of his family in August 2012, citing concerns about Sabbagh’s approach.
But two years on, it is clear that Sabbagh’s methods have borne fruit. Managing a regional bank that operates in 30 countries and within which more than 75% of revenues come from outside the Jordan home base presents a challenge that is almost unique in the Arab world, but the institution has gone from strength to strength and was a very credible candidate for our overall Best Bank in the Middle East award.
What has gone right? The numbers have started to show remarkable growth: up 43% year on year in 2013 to a $501.9 million profit. Shareholders got a 30% cash dividend, and one free share for every 15 they already held. The asset base, loan book and customer deposit base have all grown substantially and, crucially for such a diverse business, it is impressively liquid, with a strong capital adequacy ratio of 15.15%. Liquidity was a priority under the three-generation Shoman stewardship, and it has not been lost with Sabbagh’s arrival.
Numbers like this are not particularly unusual in the Gulf, but one has to remember that Jordan is not oil-rich, nor replete with global heavyweights or sovereign funds that can be relied on for easy growth and income. Although Jordan itself is peaceful, Arab Bank’s global network includes some troubled places: neighbouring Syria, Egypt, Libya, Algeria, Palestine and Sudan, among others. Building group profitability while investing in these places shows not only commitment to the long-term prospects of volatile markets (as one might expect from a bank that was born in Palestine, moving to Amman only after the creation of the State of Israel), but an ability to make money in a difficult environment. Equally, Arab Bank’s strength in the Gulf – illustrated by project finance and infrastructure deals in Bahrain, Kuwait, Oman, Saudi Arabia and the UAE over the past year – has been achieved without the benefits of a Gulf Cooperation Council home base, or the backing of a Gulf royal family. “You have to fight for your chance for business,” says an Arab Bank insider. “You have to be so agile and competent to make it happen.”
The numbers are also about more than growth; they also reflect the building of a sustainable base: the balance sheet has been cleaned up and, although the non-performing loan ratio is still higher than those of some regional peers, the bank does have bad-loan coverage of over 130%. “It is a unique model,” says a banker who has worked with Sabbagh. “It is difficult to comprehend the complexity of it, but also to appreciate the amount of management that goes into it, in terms of the risk and the performance of something this geographically diversified. It is unparalleled.”
Sabbagh’s path to Arab Bank has been circuitous, starting in the west, with qualifications from Texas, Paris, Chicago and Johns Hopkins University; his first banking job was at First National Bank in Chicago. Most of his career has been in Kuwaiti institutions, with 19 years at the National Bank of Kuwait including running that bank’s international bank group, and being managing director of the London-based NBK (International). He was MD and CEO of Arab National Bank in Riyadh (which is 40% owned by Arab Bank), and this is where he first worked with Shoman. This range of Middle Eastern locations has no doubt helped him in taking the helm of arguably the one truly regional MENA bank.
Immediately before Arab Bank, he was EGM at BankMed, and here his fortunes began to align with the Hariri family, one of whom, Rafik al-Hariri, had been prime minister of Lebanon until his 2005 assassination. The Hariris own BankMed, and also 20% of Arab Bank. It is understood to have been Shoman who recommended Sabbagh for the Arab Bank CEO role, but the admiration the Hariris have for Sabbagh no doubt proved helpful as he has taken on a bank within which they are the major shareholders.
Arguably, his time at BankMed provided the strongest evidence that he was up for the challenge of a bank as diverse as Arab Bank. BankMed involved not only restructuring the banking group but amalgamating three different Lebanese banks. He took it on an international course, too, acquiring a bank in Turkey and establishing an investment company in Saudi Arabia.
The interesting question now is where he takes Arab Bank next.
| Photos from the Awards ceremony |
