The Arab Bank - Governance and Ethics - FINAL

Arab Bank
Governance and Ethics Case Study
Advisor:
Dr. Heba Al-Ajlouni
Prepared by:
Enass Arabiyat
Fahd A. Batayneh
Fikri Kilani
MBA 764: Corporate Governance and Ethics Course

Fall Semester 2011/2012
Arab Bank - Governance and Ethics Case Study TAG Graduate School of Business
TABLE OF CONTENTS
1. Overview .......................................................................................................................................2
2. Organizational Chart ......................................................................................................................3
2008 And 2009 ................................................................................................................................... 3
2010 ...................................................................................................................................................... 4
Organizational Chart Analysis ........................................................................................................ 5
3. Corporate Governance ...................................................................................................................5
The Board Of Directors .................................................................................................................... 6
Board Members And Executives Compensation And Incentives ......................................... 10
The Board Of Directors Committees .......................................................................................... 11
Credit Rating ..................................................................................................................................... 13
Accountants And Auditors ............................................................................................................ 14
Investment Banks And Securities Analysts ............................................................................... 18
Shareholders And Shareholder Activism ................................................................................... 18
Corporate Takeovers - Mergers And Acquisitions (M&A) ..................................................... 20
Corporate Social Responsibility (C SR) ........................................................................................ 21
Miscellaneous .................................................................................................................................. 23
4. References ................................................................................................................................... 23
LIST OF TABLES
Table 1: Arab Bank Board of Directors Classification ……………………………………………………………………………… 8

Table 2: Arab Bank Board of Directors Committees …………………………………………………………………………….. 12
Table 3: Arab Bank Financial Statement Content ………………..………………………………………………………………. 15
Table 4: Arab Bank External Auditors Compensation …………………………………………………………………………… 17
Table 5: Arab Bank Major Shareholders ………………………………………………………………………………………………. 19
LIST OF FIGURES
Figure 1: Arab Bank Organization Chart 2008 and 2009 ………………………………………………………………………… 3

Figure 2: Arab Bank Organization Chart 2010 ………...………………………..…………………………………………………… 4
Corporate Governance and Ethics Page 1

1. OVERVIEW
The Arab Bank is one of the largest financial institutions in the MENA region. Founded in
Jerusalem, Palestine in 1930 as a small bank, it has evolved into one of the largest worldwide financial
institutes with over 500 branches in 30 countries across 5 continents. It sells products in Personal
Banking, Corporate and Investment Banking (CIB), AB Private Banking, and Treasury [1].
The Arab Bank was founded by Abdul Hameed Shoman; an American immigrant born in Beit
Hanania, Jerusalem, Palestine in 1890. Shoman decided to go back to Palestine and arranged a meeting
with Talaat Pasha Harb - the Chairman of the Board of Directors of the Banque Misr - to propose the
idea of establishing a joint Egyptian-Palestinian bank - with a capital of 100,000 Palestinian Pounds.
However, political developments in the region forced Harb to put the project on hold [1].
Shoman moved forward with his plan with seven investors, and a startup capital of 15,000
Palestinian Pounds. Arab Bank was registered on May 21, 1930, and commenced its operations in
Jerusalem on July 14 of the same year. His son - Abdul Majeed Shoman – studied his Bachelors and
Masters at New York University to return back to Jerusalem to assist his father in managing the newly
established bank [1].
When the branch in Jerusalem was caught up in the civil disturbance after the independence
from the British rule, the Bank’s activities were moved to offices within the old city of Jerusalem. The
Bank transferred its headquarters to Amman, Jordan, where it was officially incorporated as a public
shareholding company [1].
In 1961, the Bank opened its first international location, becoming the first Arab financial
institution to establish a presence in Switzerland. A sister institution - Arab Bank Switzerland - was
established in Zürich in 1962, with another branch in Geneva opening in 1964 [1].
In May 2000, Abdel Hamid – Abdul Majeed Shoman’s son – succeeded in occupying the
position of CEO after 30 years of experience at the bank [1].
In 2004, a terrorism lawsuit was launched against the Arab Bank on claims that it facilitated
money laundering to finance terrorist activities for groups such as Hamas, Palestinian Islamic Jihad, and
terrorist groups based in Saudi Arabia. In 2005, the bank paid a $24 million civil penalty after U.S.
banking regulators found it lacked adequate money-laundering controls to prevent it from being used
for terrorist financing. The bank said it agreed to the fine and the consent order to put the matter
behind it. As of this writing, the court case is still ongoing [1].
Abdul Majeed Shoman died on July 5, 2005. His son was elected Chairman upon his father’s
death. In the same year, the Arab Bank reopened operations in Syria, and performed necessary
preliminary arrangements to commence its activities in Iraq, circumstances permitting [1][8].
In 2006, Arab Bank was granted the green-light to establish Europe Arab Bank (EAB); a London-
based fully owned subsidiary. It also acquired 50% of MNG Bank in Turkey (now known as Turkland
Bank), and 50% of Al-Nisr Al-Arabi Insurance Company in Jordan, thus introducing Banc Assurance to its
product variety. Also, the group established Arab Bank Syria in Syria and Arab Capital Investment
Company in Dubai [1][8].

2. ORGANIZATIONAL CHART
2008 AND 2009
Chairman / CEO
Corporate Strategy Committee
Risk Management Committee
Audit Committee
Corporate Governance Committee
Human Resources (HR)
Legal & Secretariat

Nomination & Remuneration Committee
Branding
Finance
Assistant Chief Executive Officer
(ACEO) Chief Operating Officer (COO)
Regulatory Compliance
Corporate & Investment Banking
Risk Management
Real Estate and Construction
Information Technology (IT)
Internal Audit
Consumer Banking
Procurement
Operations
Treasury
Credit
EPMO
Figure 1: Arab Bank Organization Chart 2008 and 2009

2010
Board of Directors
Corporate Strategy Committee
Risk Management Committee
Audit Committee
Corporate Governance Committee
Nomination & Remuneration Committee
Executive Chairman Credit Committee
Secretary General (SG)
Chief Executive Officer (CEO) Deputy CEO
Chief Operating Officer (COO)
Corporate & Investment Banking
Legal
CIB (Jordan and Palestine)
Consumer Banking
Real Estate and Construction
Information Technology (IT)
Regulatory Compliance
Treasury
Credit
Internal Audit
Procurement
Operations
Risk Management
EPMO
Finance
Branding
Figure 2: Arab Bank Organization Chart 2010

Human Resources (HR)

ORGANIZATIONAL CHART ANALYSIS
Comparing the organizational chart of 2010 with its predecessor, we see the following findings [2][3]:
1. Prior to 2010, the chairman and the CEO was the same position with Mr. Abdul Hamid Shoman
occupying it. As of 2010, the CEO and the chairman are two different positions with Mr. Nemeh
Elias Sabbagh occupying the CEO post, and the chairman has been renamed to Executive
Chairman with Mr. Abdul Hamid Shoman occupying it.
2. While the 5 committees of the bank prior to 2010 were under the hood of the Chairman/CEO,
these committees have become under the Board of Directors as of 2010. A new committee –
The Credit Committee – has been devised, and they report directly to the Executive Chairman.
3. Some departments are controlled by both the EC and the CEO.
4. Prior to 2010, the Assistant CEO controlled 4 departments. This position was renamed to
Deputy CEO in 2010, and the 4 departments report directly to the CEO, with the Deputy CEO
taking charge if instructed by the CEO.
5. A new position – Secretary General – has been devised in 2010. This position is second-in-
charge after the Executive Chairman.
The current organizational chart of the bank closely represents a healthy corporate governance
practice in which the CEO and the chairman are two different positions.
3. CORPORATE GOVERNANCE
The Arab Bank follows the guidelines of the Central Bank of Jordan, which are based on Basel
Committee recommendations on corporate governance. It also observes the regulatory requirements of
other countries in which it operates [2][3].
The Bank has a well established framework for good corporate governance which provides a
solid basis for an effective relationship between the Bank, its Board of Directors, its shareholders, and
other interest groups. The general framework for corporate governance ensures equitable treatment for
all shareholders, and recognizes the established legal rights of both minority and foreign shareholders. It
also guarantees the availability of timely and precise information in all material matters concerning the
Bank along with the accountability of the Board to the Bank and the shareholders [2][3].
Arab Bank pioneered corporate governance practices in the Middle East. In early 1996 the Audit
Committee was established, and in 2002 the Corporate Governance Committee was created. In 2006,
the Selection and Remuneration Committee was formed, and in year 2007 the Risk Management
Committee and the Corporate Strategy Committee were established [2][3]. It is worth mentioning that all
5 committees are connected directly to the board of directors [2][3].
A sixth committee - the Credit Committee – was established in 2010, and is the only committee
that is independent of the board and reports directly to the executive chairman. This committee ensures
that credit approvals are made with consensus by a committee and not individuals with high level of
independency. This committee also assesses the Risk Management Department [2][3].
One of the board committees of the bank is the Corporate Governance Committee. This
committee consists of the Chairman and three non-executive members. It oversees corporate

governance practices within the Bank and ensures that all aspects of corporate governance are complied
with. It also assumes the responsibility of updating and implementation of the Corporate Governance
Code [2][3].
THE BOARD OF DIRECTORS
As of 2010, the Arab Bank consists of 11 members on the board. The only change made to the
2009 board members was the introduction of Ms. Dina “Mohammad Abdel Hamid” A. M. Shoman in
place of Mr. “Mohammed Thabet” Abdulraouf S. Taher. These members are [9]:
1. Mr. Abdel Hamid Abdel Majeed Shoman
 Holds the title of Executive Chairman since January 17, 2010
 Has been on the board since September 28, 1976
 Holds a B.Sc. in Business Administration
 Previously held the position of Chairman/CEO from July 2005 until January 2010. He also
held the position of Deputy Chairman/CEO from May 2001 until July 2005
 Board Member of the Central Bank of Jordan for the period running 2001 – 2005
 Member of the Upper House of the Parliament since November 2005
 Board Member of The Arab National Bank -Saudi Arabia since June 25, 2001
 Chairman and Board member of many companies and firms; Jordanian and international
 Chairs 3 of the 5 board committees (does not exists on the Audit Committee)
2. Mr. Sabih Taher Darwish Al-Masri
 Holds the title of Deputy Chairman
 Has been on the board since March 27, 1998
 Holds a B.Sc. in Chemical Engineering
 Holds the title of Chairman of the Board of Directors at the Cairo Amman Bank
 Exists on 3 of the 5 board committees
3. Mr. Samir Farhan Khalil Kawar
 Holds the title of Member of the Board of Directors
 Holds an M.Sc. in Agricultural Mechanical Engineering
 Formerly, Minister of several ministries and member of the Senate, House of
Representatives, the National Consultative Council and many of its committees
4. Mrs. Nazik Odah Al-Hariri
 Has been on the board since August 29, 1996

 Claims to be a university graduate

 President of various humanitarian and educational institutions
 Chairman and Board member of many companies and firms; Lebanese and international
 Exists on none of the board committees
5. Ministry of Finance and Economy, Saudi Arabia
 In both 2009 and 2010, it was represented by Mr. Saleh Saad A. Al-Muhanna
 While the ministry has been on the board since April 29, 1966, Mr. Al-Muhanna has been on
the board since March 31, 2006
 Mr. Al-Muhanna holds an M.Sc. in Economics
 Mr. Al-Muhanna currently holds the position of Assistant Deputy Minister for Budget
Affairs, Ministry of Finance, Saudi Arabia
 Board member and team member of many Saudi companies and firms
6. Mr. Mohammed Ahmad Mokhtar Hariri
 Has been on the board since June 11, 2005
 Holds an B.Sc. in Business Administration
 Has over 30 years experience in the management of Saudi Oger Ltd., KSA
 Chairman and Board member of many companies and firms; Lebanese and international
7. Ms. Dina “Mohammad Abdel Hamid” A. M. Shoman
 Holds an MBA in Change Management
 Has been the Executive Vice President of Branding at the Arab Bank plc in Amman since
2008
 Board member of many companies and firms; Jordanian and International
 Exists on none of the board committees
8. Social Security Corporation - Amman , Jordan
 In both 2009 and 2010, it was represented by Mr. Ibrahim Yusuf Ibrahim Izziddin
 While the corporation has been on the board since September 20, 2001, Mr. Izziddin has
been on the board since March 31, 2006
 Mr. Izziddin holds a BA in Political Science
 Mr. Izziddin has a rich profile of positions held such as being an Ambassador, minister,
director general, upper house of parliament, …
9. Abdul Hameed Shoman Foundation

 Was represented by Al-SHARIF Faris Abdel Hameed Sharaf Sharaf until November 25, 2010.
As of December 27, 2010, it is being represented by Mr. Khaled Anis Moh’d (Zand Irani)
 While the corporation has been on the board since March 31, 2006, Mr. Irani has been on
the board since December 27, 2010
 Mr. Irani holds an M.S.c. Degree in National Parks Management and Tourism
 Mr. Irani held the positions of minister and director general
 Mr. Irani is a member of none of the board committees
10. Mr. Riad Burhan Taher Kamal
 Has been on the board since July 9, 2005
 Holds an M.Sc. in Construction Engineering
11. Mr. Wahbe Abdallah Wahbe Tamari
 Holds an BA in Management and Finance
 Board member of many companies and firms; Lebanese and International
As mentioned earlier, Ms. Dina “Mohammad Abdel Hamid” A. M. Shoman replaced Mr.
“Mohammed Thabet” Abdulraouf S. Taher on the board. The following summarizes Mr. Taher’s profile
[2][3]
:
 Held the title of Member of the Board of Directors
 Held his membership on the board from March 3, 2004 until March 3, 2010
 Holds an M.Sc. in Management
The above 11 board members can be summarized as follows:
Shoman Family Non-Shoman Jordanians Non-Jordanians
3 4 4
Table 1: Arab Bank Board of Directors Classification
As we can see, 27.27% of the board members are dependent while 72.72% are independent.
These percentage values resemble the French module and the Australian module of board membership.
In addition, the board members have diverse educational and experience backgrounds, and this
resembles a good board [5].
Another note is that Abdul Hameed Shoman Foundation is categorized under “Shoman Family”.
The foundation’s board of directors is [6]:

 Mr. “Mohamed Abdel Hamid” Shoman – Chairman of the foundation, and who is also a
chairman of the Arab Bank Group
 Mr. Ibrahim Izzeddine - Deputy Chairman, and who is a board member in the Arab Bank Group
 Mr. Sabaih Taher Masri – Board member, and who is also the deputy chairman of the Arab Bank
Group
 Mrs. Dina "Mohamed Abdel Hamid" Shoman - Board member, and who is a board member in
the Arab Bank Group
 Mr. Khaled Irani - Board member, and who is a board member in the Arab Bank Group. He was
also the chairman of the foundation before moving to greener grounds
The Arab Bank board serves for four years, and the board is usually changed in March of that
year. The current board members have been seated since March 30, 2010 until March 26, 2014.
Furthermore, the board members meet at least 6 times an year to ensure a full range of topics is
considered [2][3]. The board assesses itself as well as the chairman and the CEO at least once a year.
In the USA, the average number of board members in banks is around 14. Also, entities that
operate in excess of USD 20 billion have on average around 12 board members. The Arab Bank is around
these figures as the numbers indicate above [5].
In comparing the Arab Bank board structure with the Jordanian Company’s Laws # 22 of 1997,
we reach to the following findings [2][3][7]:
1. While article 132 of the law states that the board must consist of 3-13 members, the Arab bank
consists of 11. The same law also states that the board members must be elected by the annual
general assembly, and the Arab Bank board members are elected by the annual general
assembly for a term of 4 years. The latest took place in March 2010.
2. While article 133 of the law states that each board member must maintain a number of
company shares as specified in the Memorandum of Association (MoA), a subsequent section
shall show that all board members do own shares in the Arab Bank.
3. While article 135 of the law states that the Jordanian government are entitled to a
representation on the board, the Social Security Commission (SSC) have a presence on the
board. The same law also allows foreign governments to be members of the board provided that
they own shares above the MoA, and that is the case of the Saudi government.
4. While article 136 of the law allows a corporate body to be on the board, the Abdul Hameed
Shoman Foundation is a member on the board.
5. While article 146 of the law states that “a person can only be member in 3 boards as a himself,
and up to 3 representing a corporate body, but with a maximum 5 in total”, some – if not all -
board members are involved in more than 5 boards in total.
6. While article 148 of the law states that “a member shouldn't be involved in a competing
company, or with any interest in operations. A member maybe a general manager or involved in
outside contacting by the approval of two third the board”, Mr. Sabih Taher Darwish Al-Masri is
the deputy chairman of the Arab Bank Board of directors, and at the same time he is the
chairman of the board of directors at the Cairo-Amman Bank [4].

7. Article 142 of the law regarding financial reports, the bank's Board of Directors attests and
confirms their responsibility of preparing annual financial statements, and implementing
effective internal control system complies with the international standards.
8. Article 147 of the law states that a member should be at least 21 years old, and not be a civil
servant in the government. All Arab bank board members are older than 21, and none of them
are civil servants with an exception of the SSC (which abides to article 135).
As a summary, the Arab Bank board of director abides to the best practices and the Jordanian
Law. The number of board members is very adequate, the number of annual meetings is reasonable
(maybe over), the ratio of dependent vs. independent is good, the board members background is quite
diverse, the board committees are quite extensive, the board members have a good blend of public and
private sectors representatives, and the bank structure abides to best trends. The only negative aspect is
that some board members are members on more than 5 boards, and the fact that one board member is
the chairman of the board of a competing bank.
BOARD MEMBERS AND EXECUTIVES COMPENSATION AND INCENTIVES
For the years 2009 and 2010, each board member – including the chairman – received an annual
transportation allowance of JD 18,000, along with an annual board remuneration fee of JD 5,000, which
sums up to JD 23,000 annually per board member. In addition to the previous values, the executive
chairman received in 2010 an annual salary of JD 480,000 [2][3].
In 2010, and as for the executive management, the CEO received an annual salary of JD 396,871,
the Deputy CEO received an annual salary of JD 200,000, the CFO received an annual salary of JD
300,000, and as for the various Executive Vice Presidents (EVP) the salary ranged between JD 100,000 –
200,000 [2]. It is worth noting here that the 2009 report did not mention salary details of any of the
executives; it only showed the sum of their salaries [3]. In addition, the reports do not show any bonuses;
they only show annual compensations [2][3].
The bank has a committee for Selection and Remuneration which recommends to the Board the
remuneration (including monthly salary and other benefits) of the General Manager. It also reviews the
remuneration (including salaries) of other members of the executive management [2][3].
The annual reports of 2010 and 2009 show the number of shares owned by each executive
manager, the number of shares owned by their spouse and children, and the number of shares owned
by their relatives. Thus, we can conclude that the method of compensation at the Arab Bank is a base
salary, along with stock purchasing option. The bank does not mention in its annual reports any annual
bonus schema [2][3].
In comparing the Arab Bank’s compensation and incentives structure for executives and board
members with the Jordanian Company’s Laws # 22 of 1997, we reach to the following findings [2][3][7]:
1. While part of article 138 of the law states that “All board members as well as the company's
general and principle managers must submit to the board on its first meeting after election a

written statement of the company shares owned by each individual as well as their spouses and
children”. This does appear on the annual reports of the bank for the years 2009 and 2010.
2. While article 143 of the law states that the annual reports must include the salaries, bonuses,
benefits, and travel expenses of each board member as well as the chairman, the Arab Bank
annual reports do reflect so.
3. While article 162 of the law states that “Remuneration shall be determined at a rate of 10% of
the net profit which can be distributed as dividends to shareholders, after deducting all taxes,
and must not exceed 5000 JD annually”, each board member – including the chairman – receive
a remuneration fee of JD 5,000.
THE BOARD OF DIRECTORS COMMITTEES
The Board committees are set up with delegated objectives, authorities, and responsibilities for
more efficiency. These committees report to the full Board regularly and do not substitute for the Board
and its’ responsibilities. The membership of Board Committees, are disclosed in the annual reports,
along with their responsibilities and duties. The bank has the following 5 committees [2][3]:
1. Audit Committee
 Comprises at least three non-executive Directors.
 In 2010, it consisted of Mr. Riad Kamal (Chairman), Mr. Ibrahim Izzedeen, and Mr. Wahbeh
Tamari.
 At least two members of this committee should have relevant financial management
qualifications and/or expertise, and at least two members must be independent directors.
 The committee has the ability to obtain any information from executive management, and
the ability to call any executive or director to attend its meetings.
2. Corporate Governance Committee
 Consists of the Chairman and three non-executive members.
 In 2010, it consisted of Mr. Abdel Hamid Shoman (Chairman), Mr. Sabih Taher Al-Masri,
Mr. Samir Kawar, and Mr. Mohammad Al-Hariri.
 The committee oversees corporate governance practices within the Bank and ensures that
all aspects of corporate governance are complied with. It also assumes the responsibility of
updating and implementation of the Corporate Governance Code.
3. Nomination and Remuneration Committee
 Consists of a minimum of three non-executive Directors, the majority of which (including the
Committee chairman) are independent.
 In 2010, it consisted of Mr. Wahbeh Tamari (Chairman), Mr. Sabih Taher Al-Masri, and Mr.
Samir Kawar.
 Recommends to the Board the remuneration (including monthly salary and other benefits)
of the General Manager. It also reviews the remuneration (including salaries) of other
members of the executive management

4. Corporate Strategy Committee

 Comprises three Directors as well as the executive chairman. It may also include as
members; the CFO and the Deputy CEO.
 In 2010, it consisted of Mr. Abdel Hamid Shoman (Chairman), Mr. Sabih Taher Al-Masri,
Mr. Mohammad Al-Hariri, and Mr. Wahbeh Tamari.
 Part of this committee’s duties is to review and approve any new investments, acquisitions,
mergers and expansion in new markets, and selling off assets of the Bank or of its subsidiary
or affiliate companies
5. Risk Management Committee
 Comprises of three Directors and the executive chairman. It may also include three
members of the executive management.
 In 2010, it consisted of Mr. Abdel Hamid Shoman (Chairman), Mr. Wahbeh Tamari, Mr.
Ibrahim Izziddin, Mr. Saleh Al-Muhanna, and The Manager of Risk Management.
 The structure and development of risk management department is to be proposed by
executive management, reviewed by this committee, and approved by the Board.
 The Committee makes regular reports about the development in the bank's risk
management to the Board.
The following table summarizes the 5 committees:
# of Members # of Dependent # of Independent

Board Members Board Members
Audit Committee 3 0 3
Corporate Governance 4 1 3
Nomination and Remuneration
3 0 3
Committee
Corporate Strategy Committee 4 1 3
Risk Management Committee 5 1 (+1 Executive) 3
Table 2: Arab Bank Board of Directors Committees
Article 193 of the Jordanian law states that it is unnecessary for Jordanian companies to have an
internal auditing committee. The Arab Bank does have one, though [7].
Furthermore, it is worth mentioning that in terms of Treatment of Shareholders, Arab Bank’s
policy is that the every Board Committees' chairmen must be present at the Annual General Assembly,
and they are invited to address relevant questions that might be raised by shareholders, which comply
with the Jordanian law as well [2][3].
While looking at the 5 committees, we can reach the following findings:
1. The Executive Chairman - Mr. Abdel Hamid A. M. Shoman - chairs 3 of the 5 committees. Mr.
Sabih Taher D. Al-Masri exists on three of these committees. This does raise a few eyebrows.

2. While the Audit Committee requests that 2 of the 3 members must have relevant accounting
experience and/or education, Mr. Ibrahim Izzedeen (accounting experience) and Mr. Wahbeh
Tamari (accounting education) do poses that.
3. Board members Nazik Al-Hariri, Dina “Mohammad A. H.” Shoman, and Abdul Hameed Shoman
Foundation do not have any existence on any of the 5 board committees. While Nazik Al-Hariri
does not have the relevant experience or education, Dina Shoman is still new to the board, and
the Abdul Hameed Shoman Foundation consists of board members who participate in various
committees. However, Abdul Hameed Shoman Foundation – Mr. Irani – exists on none of the
board committees.
CREDIT RATING
>> Ratings
The Arab Bank is ranked amongst the largest international financial institutions, with a rating of
A- from Fitch, A- from Standard & Poor, and AAA from Moody’s. The bank has a capital base of over
USD 5.5 Billion and Total Assets of over USD 50 billion. Pretax Income reached over USD 1 Billion in
2008, with a Net Income of USD 850 Million for the year 2008 [1][2][3].
The bank works within a frame of conservative policies which aim at improving and streamlining
the procedures of risk measurement and management, and to develop the appropriate polices for
lending and investment processes and the advanced methods of credit assessment. As a result, the
bank’s net profit was not affected by the global financial crisis, but rather contributed to maintain the
high credit rating. As a consequence, Standard & Poor’s reaffirmed credit rating for the Arab Bank
Group of December 2010 was at a level of A- with a stable outlook [2][3].
The reaffirmation was based on many criteria's such as:
1. Arab Bank conservative policies of risk management
2. The high quality of assets distribution of loan portfolio
3. Financial strength
4. The strong base of capital and comfortable level of liquidity
5. Managing the balance sheet efficiently
6. Arab Bank outstanding reputation on local and regional levels
The Arab Bank ranks first amongst banks operating in Jordan and Palestine in terms of total
assets, deposits, and credit facilities. It is also worth mentioning that the Arab Bank is listed as the
largest listed company in Amman Stock Exchange as it represents 28% of it (ARBK). In terms of market
capitalization, it is ranked number 1.
>> Processes
There is a separate department at the Arab Bank for Credit Risk Management. This department
is specialized in the Credit Risk centralized reporting, internal corporate risk rating system, and the retail

credit scoring system. These rating systems exist for the sake of improving the measurements of
“probability of default” and lead to implementing the Bank’s “risk adjusted return on capital” model [2][3].
Another department is the Business Risk Review Department. One of the responsibilities of this
department is to assess the capabilities of the credit staff, the quality of loan portfolio, lending policies
and processes, and conduct regular reviews [2][3].
The credit processes at Arab Bank are supplemented by the undertaken portfolio reviews which
are supplemented by different stress testing scenarios in order to identify any risks in the portfolios
which may result from the continuous changes in the industries and market conditions [2][3].
The bank enhances the way the roles and responsibilities of its credit staff are conducted by
providing them with credit training courses and programs which is highly selected and designed
according to their requirements; the thing that improves their skills and competencies as well [2][3].
>> Credit Risk Management

The Arab Bank adopts the highest credit standards and the best credit management techniques
and methods in order to increase their businesses size and their portfolio of loans and facilities, and thus
maintain a high quality of their credit portfolio. They also works to continually develop and upgrade the
related procedures and policies of Risk Management Mitigations, Credit Facilities Analysis, Credit
Concentration, and the Criteria for Credit Ratings in terms of Borrowers’ Strength and Credit Risk
Classification [2][3].
There are many criteria's they use to measure Credit Ratings such as financial position,
guarantees, competitiveness, economic sector, loan structure, cash flow, performance, duration … etc
[2][3].
ACCOUNTANTS AND AUDITORS
According to organizational structure, the Finance Department of the Arab Bank is responsible
for Accounting; i.e. to track and record financial transactions, prepare financial reports for internal and
external use, and provide financial advice when needed [2][3].
The Internal Audit Department is primarily responsible for reviewing the bank’s financial
reports, ensuring that significant financial, managerial and operating information is accurate, reliable
and timely, and to review compliance with internal policies, international standards and procedures, and
applicable laws and regulations [2][3].
It is worth mentioning here that while the Financial Department is viewed as a support unit, the
Internal Audit Department is viewed as a control unit [2][3].
Both the Risk Management Department and the Compliance Department play a role in auditing
financial reports but in a different and narrower scope than the Internal Auditing Department. While
the Risk Management Department is responsible for the provisioning of information for use in the
bank’s public statements and reports, the Compliance Department reports on operational compliance
of rules and regulation [2][3].

>> Bank Financial Report

After reviewing the financial report for external usage, the Arab Bank prepared two financial
statements; one for Arab Bank Group, and the other for Arab Bank PLC [2][3].
On the consolidated financial statement, the bank clarifies the following items [2][3]:
1. The basis of consolidation; i.e. it mentioned which subsidiary has been consolidated with. It also
mentioned that the intergroup transaction has been eliminated in the balance sheet.
2. The accounting standard used in preparing the financial statements is the IFRS since the group
operates under the instruction of the Central Bank of Jordan.
3. The report mentions new and revised IFRS roles, along with mentioning the date of activation
and the effect of the consolidated financial report.
4. The report mentions the basis of recognizing financial assets.
5. The report mentions the basis of recognizing the fair value of financial assets through profit and
loss
6. The report clarifies how direct credit facilities are stated as expenses, and how the value is
recorded.
7. The report states how financial assets are recognized, on which value, how the changes of fair
value are recorded, and how financial gains and losses are recorded.
8. The report states how impairments are recognized.
9. The report clarifies the method of recognizing financial derivatives.
10. The report states how the value of intangible assets is recognized.
11. The report shows how fixed assets are recognized.
12. The report clarifies the method of the measurement of current and deferred tax expenses.
13. The report clarifies how recognition of treasury shares is stated.
14. The report clarifies fiduciary deposits and when the fair value is changed.
15. The report clarifies provision to stakeholders.
16. The report mentions the method of recognizing income and expense.
17. The report clarifies the method of financial estimation.
18. The report states share capital.
19. The report states statutory and voluntary reserve.
20. The report states banking risks reserve.
21. The report clarifies business segments.
22. The report clarifies banking risk management, its types, and criteria for credit ratings.
23. The report states fiduciary deposit amounts in 31 December of 2009 and 31 December 2011.
24. The report states legal lawsuits with amounts of losses.
The financial statement included the following financial reports [2][3]:
Balance sheet Statement of cash flow Cash and balance with

central banks
Deposits with banks and Financial assets at fair value Financial assets at fair value

financial institutions through P&L - Held for through P&L-Designated

trading
Financial assets – available for Financial assets – held to Investment in Associates
sale maturity
Intangible assets Other assets Tax deferred assets
Customer deposits Cash margin Borrowed funds
Other provisions Other liabilities Deferred tax liabilities
Retained earnings Interest income Interest expense
(loss)or Gain financial assets at (loss)or Gain from financial (loss)or Gain from financial
fair value through P&L-Held for assets at fair value through Assets-Available for Sale
trading P&L-Designated
Employees Expenses Other Expenses Financial derivatives
Concentration of assets and Credit risk Interest rate risk
revenues according to
geographical distribution
Liquidity risk Net foreign currency Fair value of financial assets
positions and financial liabilities
Earnings per share Cash and cash equivalent Transactions with related
parties
Table 3: Arab Bank Financial Statement Content
As for financial statement for Arab Bank PLC, it uses the same method of recognizing assets,
liabilities, income and expenses [2][3].
The disclosures mentioned above were driven based on the following:
 Arab Bank laws.
 Central Bank of Jordan regulations.
 International financial Reporting standard (IFRS) and General Accepted Accounting principles
(GAAP).
>> Internal Audit Department and Audit Committee

As previously mentioned, the Internal Audit Department is considered as a controlling unit
along with Risk Management and Regularity Compliance Department. As per the Arab Bank
governance code, the Internal Audit Department [2][3]:
 Should be adequately resourced, trained, and remunerated according to Bank’s policy.
 Powers and responsibilities are documented within the internal audit charter which is approved
by the board and published within the bank.

 Reports primarily to the chairman of the Audit Committee.

 Do not have operational responsibilities.
 The primary responsibility is at least the review of:
1. The bank financial reports to ensure significant financial stability, managerial and operating
information is accurate, reliable and timely; and
2. Compliance with internal policies, international standards and procedures, and applicable
laws and regulations.
Based on that information, Internal Audit [2][3]:
 Has authority over any department, executives (including CEO) to carryout auditing
responsibilities without any intervention of any executives.
 Have knowledge, skills, and abilities to carryout responsibilities.
 Don’t have any operational responsibility in which they should not be influenced by operational
activities
 Powers and responsibilities are clearly defined, documented, and disclosed within the bank to
ensure that auditors will carry out their tasks properly.
Based on the above, the Internal Audit Department in the bank can be a good part of the
corporate governance monitoring system which serves the best interest of the shareholders [2][3].
Overall, the auditing committee’s formation and duties complies with the laws and regulations
which is the only driver of forming and functioning Audit committee. Auditing committee along with the
board of directors is responsible before law on the accuracy of the financial information [2][3].
>> External Auditors

The Arab Bank group has used auditing services of Deloitte & Touché for the past three years
(2008-2010). The contract with Deloitte & Touché was renewed on January 27, 2011 for a further 3
years [2][3].
The bank has stated that the total compensation paid to external auditors and consultancy firms
inside and outside Jordan in previous annual year as follows [2][3]:
2008 2009 2010

Quarterly, Semi Annual, and Annual Audit Reviews 1,365 1,481/1,090* 1,056
Consultancies and Advice 5,240 4,802 3,081
Total (Thousand of JD) 6,605 6,283/5,892* 4,137
* The figure to the left is what was stated in the annual report 2009, while the figure to the right is what is stated in
the annual report 2010
Table 4: Arab Bank External Auditors Compensation

Article 192 of the Jordanian law states that “general assembly is obligated by law to choose a
licensed auditor for one renewable year”. However, the Arab Bank decided to implement its internal
bylaws regarding external auditors, thus a 3 year contract [2][3].
INVESTMENT BANKS AND SECURITIES ANALYSTS
Corporate and Investment Banking provides banking services and finances to the corporate
sector, private projects, foreign trading, small and medium sized projects, and banks and financial
institutions [2][3].
One of the international awards and recognitions that Arab Bank has received is “Best
Investment Bank in Jordan” [2][3]
The role Arab Bank played in conjunction with a group of major international investment banks
as an underwriter and lead manager of the 5 year $750 million Eurobond issued by the Hashemite
Kingdom of Jordan. This issuance was a successful achievement for all parties, especially Jordan [2][3].
>> Arab Investment Bank S.A.L. [2][3][19]

Arab Investment Bank S.A.L is a majority owned subsidiary of Arab Bank plc founded in Beirut
with a paid-up capital of LBP 15 billion, with only one branch and 4 employees.
>> Al-Arabi Capital Limited (AB Capital) [2][3]

AB Capital was founded in 2006 as an Arab Bank plc Investment Banking arm that offers
investment banking and other services throughout the Gulf and Middle East region, with one branch
based in Dubai. AB Capital was a majority-owned subsidiary of Arab Bank plc by 80.18% until end of
2009, and it became 100% owned in January 2010.
>> Al-Arabi Investment Group (AB Invest) [20]

AB Invest was established in 1996 as the first independent investment banking firm in Jordan,
wholly owned by Arab Bank plc. Leading investment banking entity in Arab world, with two branches
operating in Jordan, and its paid-up capital is JD 14 million.
AB Invest is considered the Arab Bank’s investment banking arm in Amman, Jordan. It provides
the services of Corporate Finance, Asset Management, Brokerage and Equity Research. It was formally
known as “Atlas Investment Group”.
AB Invest works to achieve the highest quality for research products to provide clients with a
demonstrably informed opinion of the investment opportunities, and the currently associated risks
existing in the area.
SHAREHOLDERS AND SHAREHOLDER ACTIVISM
The primary responsibility of the Board is to protect and maximize the interests of the
shareholders in the long term [2][3].

The Bank takes proactive steps to encourage shareholders, in particular minority shareholders,
to participate in the Annual General Assembly, and also to vote either in person or in their absence by
proxy [2][3].
The Bank’s policy is that the chairmen of all Board Committees should be present at the Annual
General Assembly, and are invited to address relevant questions from shareholders [2][3].
Notes, minutes, and a report of the proceedings of the Annual General Assembly, including the
results of voting, and the questions from shareholders and executive management’s responses, are
prepared and made available to shareholders after the Annual General Assembly [2][3].
The Bank recognizes its obligation to provide meaningful information on its activities to
shareholders, depositors, financial market counterparts, regulators and the public in general. It also has
a duty to address shareholder concerns. The Bank’s disclosure of such information on a timely basis
should be available to all [2][3].
The Bank commits to maintaining the following information channels with its shareholders,
depositors, financial market counterparts, regulators and the public in general [2][3]:
1. A professionally-staffed investor relations function that provides comprehensive, objective, and
up-to-date information on the Bank, its financial condition and performance, and its activities.
2. The Annual Report, produced after the end of the financial year.
3. Quarterly reports, providing quarterly financial information and the Board’s report on the Bank’s
stocks trading and financial condition during the year.
4. Regular meetings between senior executives of the Bank and investors and shareholders.
5. Regular briefings by senior executives of the Bank, especially the CEO and the CFO, for
shareholders, financial market analysts, and financial journalists.
6. Information provided through the Bank’s annual report, or its quarterly reports, and the text of
any public presentations given by executives, is made available to interested parties both in
writing through the Bank’s investor relations function, and in a timely manner on the Bank’s
website, in both Arabic and English.
The Board of Directors sends invitations to each shareholder to attend the meeting of the
General assembly by e-mail, before 21 days of the due date for the meeting, to be set up arrangements
and appropriate procedures for the convening of the meeting, including choosing the place and time.
In addition, the date and venue of the General Assembly meeting will be announced in three
local daily newspapers and at least twice on the company’s website.
Furthermore, the distribution of the annual dividends of the company must take place within
thirty days after the decision has been taken in the general assembly meeting.
As for the number of shares owned by the various shareholders, the Arab Bank has three major
shareholders summarized as follows:
Shareholder No. of Shares 2010 % No. of shares 2009 %

Social Security Corporation 81,645,600 15.289 80,374,620 15.051

Saudi Oger Ltd. 51,686,340 9.679 48,026,490 8.994

Oger Middle East Holding 37,982,055 7.113 38,283,480 7.169
Table 5: Arab Bank Major Shareholders
Table 5 shows that the majority of the bank’s shareholders are institutional shareholders [5]. It is
worth mentioning here that the Arab Bank owns in total 534,000,000 issued shares for the years 2010
and 2009 [2][3].
The activism of the major two institutional shareholders (Oger Middle East Holding is a legal
entity owned by Saudi Oger Ltd. and does not have any sort of operational activity [23]) is reflected in the
board of director. While the Social Security Corporation has one representative, Saudi Oger Ltd. has
two members who represent themselves but are related to their respective corporations; i.e. Mrs. Nazik
Odah Al-Hariri who has shares in Saudi Oger Ltd., and Mr. Mohammed Ahmad Mokhtar Hariri - an
employee who worked for over 30 years with Saudi Oger Ltd. The difference in activism between the
two corporations is apparent due to the nature of each; the first being a pension fund, while the second
being a family business).
In comparing the Arab Bank’s shareholders and shareholders activism with the Jordanian
Company’s Laws # 22 of 1997, we reach to the following findings [2][3][7]:
1. While part of article 144 of the law states that “The Board of Directors of a Public Shareholding
Company shall direct an invitation to each shareholder to attend the General Assembly meeting
to be sent via ordinary mail at least fourteen days prior to the date set for the meeting. The
invitations may be delivered to the shareholder by hand against a signature of receipt”, the bank
sends them 21 days before the GA, but via e-mail. The bank relies on the JSC corporate
governance code chapter three, article two.
2. While article 145 of the law requests announcing the GA in at least 2 local daily newspapers at
least once, the bank announces in 3 local daily newspapers, and at least twice on the website.
3. While article 191/C of the law states that “The Company is obligated to pay the dividends
determined for distribution to the shareholders within forty-five days from the date of the
General Assembly’s meeting”, the bank does so within 30 days of the GA’s decision. The bank
relies on the JSC corporate governance code chapter four, section one, article six.
The Arab bank is committed to the JSC governance code in which it serves the best interest of its
shareholders.
CORPORATE TAKEOVERS - MERGERS AND ACQUISITIONS (M&A)
The Arab Bank is very selective in terms of M&A; i.e. it should fit with the strategy of the bank
and make sense in the light of the current and future market conditions. The bank has a focus for the
MENA region, and this is apparent with the M&As made within the past few years as follows [1][2][3][8]:
1. In 2006, Arab Bank bought 50% of a small Turkish bank named MNG Bank; a commercial bank.
MNG Bank had 11 branches. In 2007, MNG changed its name to Turkland Bank, or T-Bank as its
trading name.

As of December 31, 2010, the Arab Bank owned 50% of this bank with a net worth of JD
103,861,000. This net worth was the same ending 2009.
2. Also in 2006, the bank acquired 50% of Al-Nisr Al-Arabi Insurance Co. in Jordan to launch its
insurance products.
As of December 31, 2010, the Arab Bank owned 50% + 2 shares of this company with a net
worth of JD 11,250,000. This net worth was the same ending 2009.
3. In 2008, Arab Bank won an auction to buy 19% of Libya's Wahda Bank for € 210-million. Wahda
Bank was Libya's second largest private-sector bank and had € 1.7-billion of assets and 71
branches. Arab Bank had the option to eventually raise its stake in the Libyan bank to 51%.
As of December 31, 2010, the Arab Bank owned 19% of this bank with a net worth of JD
227,124,000. This net worth was valued at JD 214,138,000 ending 2009.
It is worth mentioning here that part of the Corporate Strategy Committee’s duties is that it
reviews and approves any new investments, acquisitions, mergers and expansion in new markets, and
selling off assets of the Bank or of its subsidiary or affiliate companies [1][2].
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Arab Bank started engaging in Corporate Social Responsibility (CSR) since long; they have a
wealthy record in community work and initiatives, a few of which include [2][3]:
 Abdul Hameed Shoman Foundation; which supports cultural, scientific, and research
endeavors.
 In 1931, Arab Bank founder Abdul Hameed Shoman donated 100 Palestinian Pounds to build a
University in Jerusalem [1].
 In 2006, and during a royal visit by His Majesty King Abdullah II, Arab Bank donated 2 Million JD
to support governmental poverty alleviation efforts in the Jordanian southern parts [2][3].
 Arab Bank sponsored many educational and medical institutions. The bank also provided
scholarships to students in Jordan and Palestinian territories [2][3].
 Arab Bank had a quick and determined reaction towards the human tragedy which was caused
by Hurricane Katrina in US, contributing with USD 100,000 to the American Red Cross Disaster
Relief Fund [2][3].
 Arab Bank has partnered with several hospitals, universities, schools, orphanages, youth and
cultural centers, and NGOs are among hundreds of beneficiaries in the local communities [2][3][10].
 The Together initiative was launched by the Arab Bank in 2009. Through this program, the bank
aims to promote volunteerism, collaboration, and citizenship. It symbolizes the Bank’s
commitment to the local communities by supporting them in education, environment,
healthcare, orphans, and poverty [2][3][12].
Together is a non-profit program which involves employees and aims to engage the customers
to become active members in the local community. This program is involved with many other
nonprofit organizations that cover many aspects of the community. This program is a structured
and sustainable approach to the CSR.

Through these various CSR programs, the bank offers its customers different ways to contribute
and make a difference to the community, such as [2][3][17][19]:
1. Arabi Online – Donation via using Arab Bank’s Online Internet Banking Service
2. Hala Arabi – Donation via Phone Banking.
3. Together Credit Card - A Platinum Visa Credit Card that automatically adds 0.5% of customer’s
monthly bill as a voluntary donation, and is matched by the bank with an additional 0.5%. This
program has the following apparent contributions:
 Sponsored the Amman International Marathon that was held in October 2009.
 Organized a Blood Drive with the King Hussein Cancer Foundation (KHCF), with over 50
employees of Arab Bank donated their blood to benefit patients at KHCC.
 Along with Tkiyet Um Ali, they Helped Families in Need across Jordan during Ramadan of
2011.
 Supported the Royal Society for the Conservation of Nature (RSCN) to launch the “Nature
Station” Exhibit, Sep 2011.The exhibition aimed at spotting the light on the rich biodiversity
in Jordan and all threats it faces [18].
 Arab Bank employees in coordination with Jordan River Foundation volunteered their time
and efforts in Ajloun to support the local community by supporting poverty alleviation
initiatives in Jordan.
It is worth mentioning that the hank has cooperated in such initiatives with JRF in its
“Community Empowerment Program” across different areas of the kingdom such as Maan,
Ajloun, and Zarqa to support several community based organizations in these areas through
the allocation of JD 148,000 in revolving loans to provide support for income generating
projects [17].
 Injaz Commemorated Arab Bank’s Commitment to Jordan’s Youth in June 2010. This comes
as part of an Injaz and Arab Bank Memorandum of Understanding signed, whereby the Arab
Bank adopted activities such as job shadowing, career month and school and company
courses. The total number of beneficiary students to that date is around 2,000 and the total
number of Arab Bank volunteers has reached 90 [15][16].
4. ATM - Another way to enable customers to conveniently donate to one of the non-profit
organizations at any of Arab Bank’s ATM machines.
>> Sustainability Annual Report

In 2011, the Arab Bank started to issue annual sustainability reports; they launched their first
report in June to record and summarize how they performed on the social, economic and environmental
levels during the previous year and to what extent they impacted such different fields. This report aims
at aligning and integrating the bank’s sustainability practices and procedures with the bank’s regular
business operations and activities. The launched report was certified at level “B” by the Global Reporting
Initiative (GRI) [2][3].

Finally, it is worth mentioning here that the Jordanian Companies Law does not mention
anything about CSR; thus it is totally voluntary. However, CSR does increase the stakes of a firm as it
helps gain and maintain a prestigious and respectful position within the community it serves.
MISCELLANEOUS
According to article 190 of the Jordanian Companies Law No. 22 of 1997, "Employees Saving
Funds", the company may set up a savings fund for its employees, to enjoy an independent corporate
identity. Arab Bank had applied this article a few years ago, but not anymore. And in the Arab Bank's
employees' strike that occurred in April, 2011, applying this saving fund was one of their demands.
Pioneers or “Ruwad” Program is a strategic program at the Arab bank aiming at selecting a pool
of talents among fresh graduates, training and developing them to be the future bankers of Arab Bank
through a 3 to 4 months of intensive theoretical and practical training programs. The selected candidate
should sign a contract of 2 years on condition that he/she must pay around JD 7,000 if they quit before
the completion of 2 years, which equals almost the 2 years salary.
According to the Jordanian Labor Law No. 8 of 1996 and its Amendments till 2011, "The
maximum working hours are 8 per day and 48 per week. Overtime is payable at 125 percent of base pay
(150 percent for holidays)", and through our interviews with Arab Bank's current and ex employees, this
is not applied [22].
Finally, through our interviews with Arab Bank's current and ex-employees, we found many of
them - especially sales employees - didn't receive their commission fee on time; they sometimes took it
a year later or so. In addition, some of their ex-employees - who left the bank years ago - didn't receive
any of their end-of-service earnings yet.
4. REFERENCES
1. Wikipedia (2011), Arab Bank [online], available from:

http://en.wikipedia.org/wiki/Arab_Bank
2. Arab Bank (2010), Arab Bank Group Annual Report 2010 [online], available from:
http://www.arabbank.com/uploads/Reports/2010e.pdf
3. Arab Bank (2009), Arab Bank Group Annual Report 2009 [online], available from:
http://www.arabbank.com/uploads/Reports/2009e.pdf
4. Arabian Business (2011), Cairo Amman Bank [online], available from:
http://www.arabianbusiness.com/companies/cairo-amman-bank-67087.html
5. K. Kim, J. Nofsinger, D. Mohr (2010), Corporate Governance, 3rd Edition, Pearson
6. Abdul Hameed Shoman Foundation (2011), Board of Directors [online], available from:
http://www.shoman.org/en/content/board-directors
7. Jordanian Ministry of Industry and Trade (2011), The Companies Law No. 22 of 1997 and its
amendments [online], available from:

http://www.mit.gov.jo/portals/0/tabid/502/Companies%20Law.aspx
8. Banking Mergers BlogSpot (2010), Jordan Bank Mergers & Acquisitions (Arab Bank) [online],
available from:
http://bankingmergers.blogspot.com/2010/05/jordan-bank-mergers-acquisitions-arab.html
9. Arab Bank (2011), Arab Bank Board of Directors [online], available from:
http://www.arabbank.com.jo/en/boardofdirectors.aspx
10. Arab Bank (2011), Arab Bank Organizes Blood Drive with the King Hussein Cancer Foundation
[online], available from:
http://www.arabbank.com/en/news/newsstory_404.aspx
11. Arab Bank (2011), Arab Bank – What’s New [online], available from:
http://www.arabbanking.com.jo/en/en-whatsnew.html
12. Arab Bank (2011), Arab Bank Together Program [online], available from:
http://www.arabbank.jo/together.aspx
13. Arab Bank (2011), Arab Bank Sustainability Report [online], available from:
http://www.arabbank.com/en/sustainability.aspx
14. CSR Middle East Organization (2011), Arab Bank Launches its First Sustainability Report [online],
available from:
http://csrmiddleeast.org/profiles/blogs/arab-bank-launches-its-
first?xg_source=activity&utm_source=twitterfeed&utm_medium=twitter
15. Injaz (2010), Career Path 2011 [online], available from:
http://www.injaz.org.jo/SubDefault.aspx?PageId=303&NewsID=HTYc0rK+UHY=&LangId=2
16. Albawaba Online Media (2011), Injaz and Arab Bank celebrate the success of the Career Month
Program [online], available from:
http://www.albawaba.com/injaz-and-arab-bank-celebrate-success-career-month-program
17. Jordan River Foundation (2011), Arab Bank Employees Volunteer in Ajloun to Support the Local
Community [online], available from:
http://www.jordanriver.jo/events/EventDetail.aspx?Language=E&EventId=735
18. Arab Bank Facebook Page (2011), The Royal Society for the Conservation of Nature Launches the
“Nature Station” Exhibit- With Support From Arab Bank [online], available from:
http://www.facebook.com/note.php?note_id=252855428092494
19. Arab Bank (2011), Corporate & Investment Banking (CIB) [online], available from:
http://www.arabbank.com/en/corpandinvest.aspx
20. Al-Arabi Investment Group (2011), Al-Arabi Investment Group Co. (AB Invest) [online], available
from:
http://www.ab-invest.net/index.php?option=com_content&task=view&id=44&Itemid=78
21. Amman Chamber of Industry (2011), Information Procedures [online], available from:

http://www.aci.org.jo/development/en/procedures.php
22. Stock Experts Network (2011), Arab Bank Demonstrations [online], available from:
http://stocksexperts.net/showthread.php?t=45070&s=5377895d6b0ed05df2c4205a601fd8e1
23. AMEinfo (2004), Stampede [online], available from:
http://www.ameinfo.com/33297.html

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Arab Bank

Governance and Ethics Case Study

MBA 764: Corporate Governance and Ethics Course

Table 1: Arab Bank Board of Directors Classification ……………………………………………………………………………… 8

Figure 1: Arab Bank Organization Chart 2008 and 2009 ………………………………………………………………………… 3

Corporate Governance and Ethics Page 1

Corporate Governance and Ethics Page 2

2008 AND 2009

Corporate Strategy Committee

Risk Management Committee

Corporate Governance Committee

Human Resources (HR)

Legal & Secretariat

Information Technology (IT)

Figure 1: Arab Bank Organization Chart 2008 and 2009

Corporate Governance and Ethics Page 3

Corporate Strategy Committee

Risk Management Committee

Corporate Governance Committee

Nomination & Remuneration Committee

Executive Chairman Credit Committee

Secretary General (SG)

Chief Executive Officer (CEO) Deputy CEO

Chief Operating Officer (COO)

Corporate & Investment Banking

Information Technology (IT)

Figure 2: Arab Bank Organization Chart 2010

Corporate Governance and Ethics Page 4

ORGANIZATIONAL CHART ANALYSIS

Corporate Governance and Ethics Page 5

THE BOARD OF DIRECTORS

Corporate Governance and Ethics Page 6

 Claims to be a university graduate

Corporate Governance and Ethics Page 7

Corporate Governance and Ethics Page 8

Corporate Governance and Ethics Page 9

BOARD MEMBERS AND EXECUTIVES COMPENSATION AND INCENTIVES

Corporate Governance and Ethics Page 10

THE BOARD OF DIRECTORS COMMITTEES

Corporate Governance and Ethics Page 11

4. Corporate Strategy Committee

# of Members # of Dependent # of Independent

Corporate Governance and Ethics Page 12

Corporate Governance and Ethics Page 13

>> Credit Risk Management

ACCOUNTANTS AND AUDITORS

Corporate Governance and Ethics Page 14

>> Bank Financial Report

Balance sheet Statement of cash flow Cash and balance with

Corporate Governance and Ethics Page 15

financial institutions through P&L - Held for through P&L-Designated

>> Internal Audit Department and Audit Committee

Corporate Governance and Ethics Page 16

 Reports primarily to the chairman of the Audit Committee.

>> External Auditors

2008 2009 2010

Table 4: Arab Bank External Auditors Compensation

Corporate Governance and Ethics Page 17

INVESTMENT BANKS AND SECURITIES ANALYSTS

>> Arab Investment Bank S.A.L. [2][3][19]

>> Al-Arabi Capital Limited (AB Capital) [2][3]

>> Al-Arabi Investment Group (AB Invest) [20]

SHAREHOLDERS AND SHAREHOLDER ACTIVISM

Corporate Governance and Ethics Page 18