Shoman's resignation marks a departure following 80-years of Arab Bank
The resignation of Arab Bank Chairman Abdel Hamid Shoman signals the end of an era for the family that controlled and managed one of the Middle East’s largest financial institutions for over 80 years.
According to experts in the banking industry, the resignation of Shoman from the Arab Bank Group, once the largest privately-owned financial house in the Arab world, shows that the family management reign came to an end on Thursday, when he and other members of his family quit over dispute with top executives.
For nearly 80 years, the Arab Bank has always been interlinked to the Shoman family, particularly the late Abdul Hameed Shoman who founded the financial firm in Jerusalem in 1930.
Born in 1890 in the Palestinian village of Beit Hanina, 6.4km north of Jerusalem, Shoman began his career at the age of seven as a stone mason working in construction sites, according to the bank’s website.
With ambitions exceeding his age and spanning further than the borders of his village and country, Shoman emigrated to the US at the age of 20 with only $32 in hand and became a door-to-door salesman, selling dry-good products in New York and Baltimore.
His consecutive successes led him to expand and start a dress-making factory in Manhattan’s garment district, according to the website.
Despite his success, Shoman was feeling home-sick and began to be consumed with an even larger vision: The establishment of a bank with joint Arab participation, a bank that would play a significant role in shaping the lives of nations and their economies.
Currently, with a capital of over $30 billion, the bank operates through more than 500 branches in 30 countries across five continents.
Drop in stake
Banking expert Mefleh Aqel told The Jordan Times on Thursday that the Shoman family used to own around 18 percent of the bank’s shares less than 10 years ago, while now its stake is below 6 percent.
In 2003, the family of Khalid Shoman sold their shares to Saudi Oger, owned by the Lebanese Hariri family. Khalid Shoman, who died in 2001, is the second son of Abdul Hameed Shoman the founder and the brother of Abdul Majid.
“It’s true that the bank has historically been linked to the Shomans,” said Aqel, who served at the Arab Bank for 26 years and assumed top management posts.
Management changes had to happen, particularly after the death of Abdul Majid and Khalid, the banker said, adding that shareholders have been working to make changes in the top management after the share price of bank dropped from over JD35 to JD6.
“A resignation due to dispute with top directors is a normal thing and should not be seen as a negative factor that may affect the soundness of the bank,” Aqel said, expecting changes inside the institution that would improve its performance in the short term. Aqel said although Abdel Hamid Shoman gave up his top management post, he would not sell the remaining stake of the family.
Rumours have previously circulated that the family of former Lebanese prime minister Rafiq Hariri wanted to move the headquarters of the Arab Bank from Amman to Beirut.
“There are no signs that this would ever happen. The bank will remain in Amman,” the banking expert said, explaining that the Social Security Corporation owns around 20 per cent, nearly the same stake as that of the Hariri family.
During the first half of this year, the Arab Bank Group reported a 10 per cent growth in net profit to $360.3 million compared with $327.2 million during the same period of 2011.
- Giving up on the EU? Greece, Cyprus look to GCC investors
- Turkish whistleblower: government can hand over any bank to state fund
- Why Israelis are rushing to empty out their Swiss bank accounts
- Wealth in the land of Arab Spring: Egypt's top ten richest men in 2014
- Will the US dollar peg protect GCC currencies?