Jordan staves off two crises
Despite shaky state finances, the country’s banking system has so far avoided disaster, partly thanks to the caution of central bank governor Umayya Toukan. But can the kingdom remain a haven of stability? Dominic O’Neill reports.
THE YEARNING FOR security characteristic of much of Jordan’s banking sector is perhaps understandable given its geographical position. So while the kingdom’s neighbours may be politically volatile, its banks have been largely shielded from the collapse of the financial system in the west. No Jordanian banks have had to be rescued, and annual results for 2009 show them making healthy, if lower profits.
Arab Bank, one of the largest regional lenders, saw profits fall only 31% last year, although provisions were five times as high as in 2008. Housing Bank for Trade and Finance, the country’s second-biggest lender, similarly saw profits decline by about a third, while its provisions were around six times higher than in 2008. Profits fell 8.5% in 2009 at Jordan Kuwait, the third-biggest bank, part of Kuwait’s Kipco group. Jordan Kuwait’s provisions in 2009 were twice those of 2008.
"Central banks are not concerned with being popular. What you described as conservatism is what ultimately protected our banks from the global banking crisis"
Umayya Toukan, Central Bank of Jordan
This relative success is partly a testament to Jordan’s lingering memory of a currency crisis 20 years ago, after the first Palestinian Intifada.