The National Bank (“TNB”), headquartered in Ramallah, Palestine, announced today the signing of a definitive acquisition agreement with Bank al Etihad (“Etihad”), headquartered in Amman, Jordan, to acquire Etihad’s operations in Palestine.
Bank Al-Etihad, one of the largest banks in Jordan, was established in 1978 and has been operating in Palestine since 1995.
The announcement was made during a press conference in Ramallah in the presence of Dr. Jihad Alwazir, Governor of the Palestine Monetary Authority (“PMA”), Mr. Talal Nasereddin, TNB chairman, Issam Salfiti, Etihad chairman, Hatem Sirhan, the Companies Controller in addition to the board members of both banks, senior managements of various banks and companies, as well as the media.
In his statement, Nasereddin announced that TNB, with a capital of $75 million, will acquire Etihad’s operations in Palestine and Etihad will own a 10% stake in TNB as well as assume one seat on TNB’s board. Nasereddin stressed the importance of this transaction, which is expected to reflect positively on TNB and its client base, helping to also strengthen the Palestinian banking sector and the overall Palestinian economy.
Nasereddin also added: “This transaction is the first of its kind in the Palestinian banking sector, whereby an indigenous Palestinian bank acquires a Jordanian bank, noting that Jordanian banks in Palestine hold a significant share of the banking sector.” The Etihad acquisition would mark the second M&A transaction for TNB, which was born in 2012 out of the merger of Alrafah Microfinance Bank and the Arab Palestinian Investment Bank.
Nasereddin also commented: “one TNB’s notable achievements in 2014 was the award it received as the fastest growing bank in Palestine by Banker Middle East Magazine, which also ranked TNB as the fastest growing bank in the Middle East relative to various reputable and well known Arab banks.”
Regarding TNB’s financial performance, Nasereddin said: “The bank’s assets grew by 284% reaching $606 million at the end of Q3 2014 up from $158 million at the end of 2010. Regarding customer deposits, they grew by 384% reaching $387 million compared to $80 million at the end of 2010. Credit facilities also grew to reach $299 million at the end of Q3 2014, a 610% increase from $42 million at the end of 2010.” He stressed that this growth underscores TNB’s robust operation and its ability to reposition itself in the Palestinian financial market as a major player, buoyed by TNB clients’ high confidence in the bank.
In closing, Nasereddin thanked the PMA and the Ministry of Economy for their continuous support and efforts to ensure the success of this transaction, while welcoming Etihad as a new strategic partner in TNB, a step that will help TNB achieve further growth and meet its aspirations.
During his speech, Salfiti expressed his confidence in the Palestinian economy and praised the financial performance of TNB, which encouraged Etihad to invest in TNB. He said that Etihad’s staff in Palestine will be assimilated into TNB and shall enjoy the same rights and privileges as their fellow TNB colleagues in line with the Palestinian labor laws.
For his part, Alwazir reiterated his support for this transaction and praised the high level of professionalism exhibited by both parties in reaching an agreement. He was encouraged that this move will contribute positively to the financial stability of the Palestinian banking sector and is in line with the PMA’s plans to raise the minimum capital requirements to encourage consolidation across the sector, helping mitigate shocks to the system. Alwazir also added that “despite the challenging economic and political conditions in Palestine, especially after Israel’s latest war on Gaza, Palestinian banks have defended against difficulties and proven their ability to manage risk through close coordination with the PMA.
In closing, Alwazir congratulated TNB’s board of directors for taking this step, which will enhance the bank's position in the banking sector. Alwazir also thanked Etihad for maintaining their operations in Palestine despite the challenging environment.