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Shaping a Transparent Future: The AACI’s Mission to Elevate Ethical Banking

Interview with Mr. Mike Masoud, Anti-Corruption Expert at the American Anti-Corruption Institute (AACI)

1. Overview of The American Anti-Corruption Institute (AACI)

The American Anti-Corruption Institute (AACI) is a leading global organization dedicated to empowering board members, executive management, and managers—collectively referred to as decision-makers—with the cutting-edge anti-corruption knowledge and skills necessary to prevent and combat corruption and fraud. Established with a mission to equip decision-makers across various sectors, including banking, with the tools to effectively identify, manage, and mitigate corruption risks, The AACI offers a range of anti-corruption certifications. We aim to ensure that the tone at the top is proper and proactive in safeguarding organizations from the damaging effects of corruption. The Institute’s flagship programs include the Certified Anti- Corruption Manager (CACM), the Certified Anti-Corruption Fellow (CACF), the Certified Anti- Corruption Expert Manager (CACEM), and the Certified Anti-Corruption Entity (CACE), among others. These certifications serve to cultivate an informed, ethical, and proactive workforce capable of making sound decisions in the fight against corruption.

2. What does the recent Memorandum of Understanding (MOU) signed between The AACTI, the Union of Arab Banks (UAB), and Tomorrow’s Advice (TA) mean for the future of anti-corruption efforts in the MENA region?

The MOU signed on August 22, 2024, represents a significant step forward in our collective efforts to institutionalize anti-corruption initiatives across the banking sector in the MENA region. This partnership with the Union of Arab Banks (UAB) and Tomorrow’s Advice (TA) aims to advance anti-corruption learning and certification programs for UAB members. By promoting the culture of anti-corruption and disseminating knowledge about The AACI’s Ten Principles of Fighting Corruption, we seek to empower the banking sector with the necessary tools to prevent corruption proactively.

The MOU underscores the importance of collaboration between industry leaders, governance bodies, and institutions in creating a transparent, ethical banking environment. This partnership will enhance the integrity of the sector, fostering a stronger, more resilient financial system that aligns with global standards of anti-corruption and integrity.

3. How does this partnership with UAB and TA align with The AACI’s mission to promote integrity and transparency in the banking sector?

Our mission at The AACI has always been to empower decision-makers with the knowledge and skills to proactively prevent corruption and fraud. This partnership with the UAB is a natural extension of that mission, as the Union represents 360 member banks and financial institutions across the Arab League member states, Europe, and Turkey.

Through the MOU, we are working together to promote transparency, independence, and competence across the banking sector. By implementing anti-corruption certification programs and disseminating The AACI’s Ten Principles of Fighting Corruption, we aim to bolster the ethical foundations of the banking industry and ensure that it remains a trusted institution for sustainable economic growth and stability.

4. Why is the banking sector critical in the fight against corruption, particularly in the MENA region?

The banking sector plays a pivotal role in economic stability and growth, which makes it a critical player in the fight against corruption. In the MENA region, where corruption risks can be heightened due to complex political and economic dynamics, banks have a unique responsibility to safeguard the integrity of financial transactions and prevent the flow of illicit funds.

By fostering a culture of integrity, anti-corruption, and compliance with the relevant laws, rules, and regulations, we ensure that financial institutions remain accountable to their stakeholders, customers, and regulators. This partnership with the UAB helps to institutionalize anti-corruption practices within banking operations, enhancing both regional and global efforts to combat financial crimes such as money laundering and terrorism financing.

5. How do The AACI’s anti-corruption certification programs, like the CACM, play a role in promoting integrity within financial institutions?

The Certified Anti-Corruption Manager (CACM) and other certifications of The AACI are designed to equip professionals in the banking sector with the knowledge and tools to tackle corruption effectively. By addressing the CACM’s core areas of anti-corruption, internal control, governance, anti-money laundering, auditing and accounting for decision makers, Blockchain and AI, the United Nations Convention Against Corruption, the OECD Anti-Bribery Convention, Financial Actions Task Recommendations, and risk management, these programs empower managers and executives to implement robust anti-corruption frameworks in their organizations.

With the increasing emphasis on anti-corruption compliance from both regulators and the public, certifications like the CACM provide professionals with the skills necessary to meet and exceed these expectations. This is particularly important in regions like MENA, where the regulatory landscape is evolving and financial institutions must stay ahead of emerging risks and compliance requirements.

6. What impact do you foresee from this partnership on the sustainable development 4% goals (SDGs) and the broader economic stability in the MENA region?

This partnership has a direct alignment with the UN’s Sustainable Development Goals (SDGs), particularly Goal 16: Peace, Justice, and Strong Institutions. By promoting anti-corruption learning, integrity, and transparency within the banking sector, we are contributing to the creation of more stable, accountable, and transparent financial systems in the MENA region.

The long-term impact of this initiative will be felt not just in the banking sector but in the broader economy as well. A transparent, ethical financial system fosters investor confidence, supports sustainable economic growth, and strengthens the region’s ability to attract foreign investment. Ultimately, this partnership represents a vital contribution to both regional and global efforts to foster economic stability and prosperity.

7. How does the banking sector’s anti-corruption strategy align with national efforts to combat corruption?

The banking sector is a critical player in national anti-corruption efforts due to its role as a cornerstone of the economy and its responsibility to ensure the integrity of financial transactions. For an anti-corruption strategy to be effective, it must align with the broader national anti- corruption strategy.

At The AACI, we emphasize that a bank’s anti-corruption strategy should be designed, implemented, and evaluated in a way that supports not only the bank’s internal goals but also those of the broader banking sector and the country. This alignment fosters collaboration, ensures consistency in combating corruption across sectors, and strengthens national resilience against corruption. The AACT’s certification programs, including the CACM, equip banking professionals with the expertise to develop and manage strategies that contribute to this unified effort.

8. Why is addressing conflicts of interest essential in the fight against corruption within the banking industry?

Conflicts of interest are a corruption risk in the banking sector and can significantly undermine its integrity if left unchecked. They may arise in various forms, such as unethical decision- making or favoritism, which can ultimately lead to corrupt practices.

The AACI’s anti-corruption certification programs, especially the CACM, place significant emphasis on understanding the nature of conflicts of interest, identifying their sources, and implementing measures to mitigate their risks. By educating banking professionals on these issues, we ensure they are equipped to recognize and address conflicts of interest before they escalate into corruption. This proactive approach strengthens governance and fosters trust among stakeholders.

9. What role does institutional integrity play in fostering an ethical banking environment?

Institutional integrity refers to an organization’s adherence to the Ten Principles of Fighting Corruption and Standards on Fighting Corruption (SFCs) in its interactions with stakeholders, distinguishing it from the concept of individual integrity. For banks, institutional integrity is fundamental in building trust, maintaining a solid reputation, and ensuring sustainable operations.

The AACI champions the importance of institutional integrity through initiatives like the Certified Anti-Corruption Entity (CACE) program. This certification demonstrates an entity’s commitment to combating corruption and fraud while fostering a culture of transparency and accountability. Moreover, banks with more CACM-certified professionals are better positioned to enhance their institutional integrity, as these professionals bring expertise in designing and implementing effective anti-corruption measures.

10. How can whistleblowing strengthen a bank’s anti-corruption strategy?

Whistleblowing is one of the most effective methods for detecting fraud and corruption. Research shows that over 50% of fraud and corruption cases are uncovered through tips provided by employees, customers, or other stakeholders.

An effective anti-corruption strategy for banks must include whistleblowing as an integral component. The AACI’s CACM certification dedicates a comprehensive unit to the topic of whistleblowing, covering its nature, methods, and policy design. By implementing robust whistleblowing mechanisms, banks can deter, prevent, and detect corruption more effectively while promoting a culture of accountability and transparency. Encouraging and protecting whistleblowers ensures that concerns are raised without fear of retaliation, strengthening the organization’s defenses against corruption.

Conclusion

The signing of this MOU marks a turning point in our efforts to combat corruption and promote transparency within the banking sector. By joining forces with the Union of Arab Banks and Tomorrow’s Advice, The AACI is committed to ensuring that anti-corruption principles are firmly embedded in the fabric of the banking industry, not just in MENA but globally. Through initiatives like the CACM certification and the dissemination of best practices, we are empowering professionals and organizations to take proactive steps in safeguarding the future of our financial systems.

 

 

 

Press Release – The American Anti-Corruption Institute (AACI) and the Union of Arab Banks (UAB) sign a Memorandum of Understanding to Promote Anti-Corruption and Integrity

The American Anti-Corruption Institute (AACI) proudly announces the signing of a Memorandum of Understanding (MOU) with the Union of Arab Banks (UAB) and Tomorrow’s Advice Global s.a.l. offshore Lebanon (TA Global) alongside Tomorrow’s Advice s.a.r.l. (TA). This significant agreement was formalized on August 22, 2024, during the “Annual Forum of Combatting Money Laundering and Terrorism Financing: The Repercussions of Cash Economy on the Banking Sector” at the Phoenicia Hotel Beirut, Lebanon. The conference was held under the auspices of the Acting Governor of the Central Bank of Lebanon and Head of the Special Investigation Commission in Lebanon, Dr. Wassim Mansouri.

The MOU was signed by Dr. Wissam H. Fattouh, Secretary General of the UAB and Mr. Mike Masoud, Senior Director of the Middle East and Africa at The AACI, , and Mrs. Gina J. Chammas, CACM, Founding Partner of TA Global and TA, and Senior Adviser of The AACI in MENA. The signing ceremony was attended by Retired Brigadier-General PSC, Hassan Jouni, PhD, CACM, Advisor of The AACI in the MENA region.

The forum and the ceremony were attended by esteemed guests, CACMs members of The AACI, and professionals in related fields, highlighting the importance and far-reaching impact of this partnership.

The MOU outlines a collaborative effort to advance anti-corruption learning and certification programs for members and stakeholders of the Union of Arab Banks and the banking sector under the UAB’s jurisdiction. The parties have committed to a partnership that seeks to bolster the integrity of the banking sector by equipping its members with essential anti-corruption knowledge and tools. The Union of Arab Banks shall promote the culture of anti-corruption and disseminate knowledge about the Ten Principles of Fighting Corruption promulgated by The American Anti-Corruption Institute (AACT) to its members throughout its territory.

This MOU represents a pivotal step forward in the ongoing efforts to institutionalize corruption prevention, integrity, and transparency in the banking sector in particular, and in sustainable economic development in general.

About The American Anti-Corruption Institute (AACI): The AACI (theaaci.net) is a pioneering organization dedicated to empowering executive management and governance bodies with the knowledge and skills necessary to prevent fraud and corruption proactively. Through its premier anti-corruption certification programs for individuals and entities, including the Certified Anti-Corruption Manager (CACM) and Certified Anti-Corruption Entity (CACE), The AACI fosters institutional change and assesses corruption risks, guided by its Ten Principles and Standards on Fighting Corruption, and promoting transparency, independence, competence, and integrity. The AACI emphasizes corruption prevention as the cornerstone of effective corruption control.

About Tomorrow’s Advice Global s.a.l. offshore Lebanon and Tomorrow’s Advice s.a.r.l.: TA Global and TA are leading management and financial consultancy firms, specializing in strategic advice, development, sustainability, internal control, compliance, governance, and anti-corruption initiatives, particularly within the MENA region.

 

antoine habib (1)

Transparency, Innovation, and Resilience: Inside Banque de l’Habitat’s Journey

Chairman Antoine Habib reveals how the bank maintains credibility and secures funding in challenging times.

How do you evaluate Banque de l’Habitat’s role in fulfilling its commitments despite economic challenges?

Banque de l’Habitat has always been a model of commitment, staying true to the principle that “a promise is a debt of honor.” Since I were elected in 2022 to lead this institution, I have maintained a strategic goal of facilitating access to decent housing for families with low and middle incomes. Despite the economic difficulties, we explored various funding sources, both local and international, in collaboration with Arab, European, and international organizations.

Although initial efforts faced skepticism, we tackled challenges with determination and resilience. Banque de l’Habitat not only honored its commitments but also successfully dispelled doubts, solidifying its position as a reliable institution capable of overcoming crises. The bank has proven that challenges can be transformed into opportunities for growth and development, reinforcing its credibility and flexibility in effectively supporting the Lebanese community.

Can you share the details of Banque de l’Habitat’s collaboration with the Arab Fund for Economic and Social Development?

In 2023, at the invitation of Engineer Nabil Al-Jisr, Chairman of the Council for Development and Reconstruction (CDR), we participated in a meeting with a delegation from the Arab Fund for Economic and Social Development at the council’s headquarters. During this meeting, we presented a comprehensive report on the financial and administrative status of Banque de l’Habitat and renewed our request to reactivate a loan granted in 2019, which remains pending.

This meeting was characterized by transparency and positivity, allowing us to emphasize our strict adherence to financial management standards and reaffirm that Banque de l’Habitat has always honored its financial obligations to Arab funds and other institutions. The Arab Fund delegation also evaluated the bank’s assets, noting that all our branches across Lebanon are fully owned, which is a strategic advantage that strengthens the bank’s stability and sustainability.

It is important to acknowledge the visionary leadership of former General Manager Mr. Joseph Sassine, who spearheaded the acquisition of all bank branches. This achievement facilitated a thorough financial due diligence process, which confirmed the bank’s robust financial standing. Under Mr. Sassine’s leadership, successive boards meticulously fulfilled all financial obligations, including the repayment of borrowed capital and interest owed to donors. This financial discipline was pivotal in securing the Arab Fund loan in 2019.

Today, the current administration remains committed to the same prudent approach, guided by strong governance policies that ensure stability and sustainable growth for the bank.

What were the outcomes of the official mission to Kuwait and your meeting with the Arab Fund for Economic and Social Development?

During an official mission to Kuwait, we met with representatives of the Arab Fund for Economic and Social Development. The primary objective of the meeting was to finalize the disbursement of the second installment of the loan, valued at USD 16.3 million, aimed at supporting families with low and middle incomes. The Arab Fund confirmed that the installment would be transferred to our account upon receiving the official request, which was completed by the end of November 2024.

Adapting to the current economic conditions, the loan currency was converted from Lebanese Lira to US Dollars and will be disbursed over ten equal installments within five years, at an interest rate of 6%. This funding is a cornerstone of financial stability and allows Banque de l’Habitat to continue supporting Lebanese citizens seeking to own homes, reaffirming the bank’s ability to uphold its mission even amidst crises.

How has the new electronic platform simplified and streamlined the loan application process?

We launched an innovative electronic platform designed to simplify administrative procedures and make the loan application process more accessible for borrowers. Through this platform, Lebanese citizens, regardless of location, can submit their applications online with ease, receive immediate feedback on eligibility, and finalize procedures at the nearest bank branch. This initiative reflects our commitment to offering more efficient and transparent services that align with the evolving needs of our clients.

Are the current financial resources sufficient to meet citizens’ needs?

While current funding sources are limited, they are primarily allocated to support the purchase, construction, or renovation of housing in rural areas outside the capital, Beirut. This support aims to reduce rural-to-urban migration and encourage Lebanese citizens to remain in their hometowns, in line with the vision of late Presidents Salim Al-Hoss and Elias Sarkis, who established Banque de l’Habitat in 1977. Their vision sought to preserve Lebanon’s social fabric and promote local stability.

However, the available funds, totaling USD 165 million, are insufficient to meet the growing demand. To bridge this gap, we requested additional financing from international institutions, such as the Abu Dhabi Fund for Development and the Kuwait Fund for Arab Economic Development. The Lebanese Council of Ministers tasked the Council for Development and Reconstruction (CDR) with negotiating these loans to secure the necessary resources, ensuring sustained support for citizens and fostering sustainable development.

What strategies does Banque de l’Habitat employ to ensure the sustainability of new funding sources, both local and international?

Banque de l’Habitat follows a comprehensive and diversified strategy to secure sustainable financial resources by enhancing funding at the local, regional, and international levels. Domestically, the bank relies on certificates of deposit as a key funding source, supported by legislative initiatives such as Decree No. 9812, which mandates insurance companies to deposit guarantees with the bank. Additionally, Minister of Labor Mr. Mustafa Bayram raised the ceiling for certificates of deposit for individuals and companies, strengthening the bank’s capacity to support low- and middle-income families.

Internationally, we have built strategic partnerships with reputable organizations, including the U.S. Agency for International Development (USAID), UN Habitat, the European Bank for Reconstruction and Development, and the French Development Agency. These partnerships expand funding opportunities under favorable terms, enabling the bank to effectively support Lebanese families and contribute to economic and social stability in the country.

What are the main obstacles facing borrowers, and how can they be addressed?

One of the main challenges lies in administrative complexities associated with real estate records, as the required documentation often hinders borrowers’ ability to access loans. We call upon the Ministry of Finance to take decisive steps to resolve these issues and simplify procedures. Achieving joint cooperation among all relevant stakeholders is essential to overcoming these challenges and enabling Lebanese citizens to secure adequate housing that meets their needs and enhances their social stability.

What does the Excellence Award received by Banque de l’Habitat signify for its position among Arab banking institutions?

Receiving the Excellence Award from the World Union of Arab Bankers is a prestigious honor that reflects recognition of our ongoing efforts. This award, earned among more than 300 Arab banks and financial institutions, underscores our ability to fulfill our commitments and achieve our goals despite economic challenges, further enhancing our leadership position in the Arab banking sector.

What sets Banque de l’Habitat apart from other Lebanese banks, particularly in housing loans?

Banque de l’Habitat distinguishes itself through its exclusive specialization in housing loans, a sector that many Lebanese commercial banks have abandoned due to the current crises.

Furthermore, we have taken proactive steps to ensure transparency and integrity in all our operations. In collaboration with Ms. Joelle Fawaz, Chairwoman of the Legislative and Consultation Committee, we adopted the use of cross-border accounts to ensure that loan funds are transferred in US Dollars through accounts outside Lebanon. This measure enhances the transparency of our operations and ensures the highest levels of financial security for both borrowers and funding institutions, reaffirming our commitment to providing reliable and sustainable solutions that meet long-term needs.

Adel-El-Labban_Ahli-United-Bank-

A Note to the Future, by Adel El-Labban

Adel El-Labban is one of the most distinguished bankers of his generation. He led Commercial International Bank as it became the premier bank in Egypt, and he led Ahli United Bank’s expansion to become the largest bank in Bahrain. Earlier this year, he resigned from Ahli United Bank, so Arab Banker asked him to share his experience, and offer some guidance on the components and conditions that are needed to deliver healthy banks and banking systems.

Experience is supposedly the maturing of judgment over time, forged by trial and error. A forty year career in regional, commercial and investment banking, mostly spent in a CEO or Board capacity across Egypt, the UK, Bahrain, the USA and the GCC, has given me an opportunity to witness and to closely interact with the recurring financial and political upheavals of the region as well as with the far reaching regulatory, technological and social transformations that have reshaped the global banking industry.

In sharing points of relevance from this long journey, one must tread carefully between the Scylla of personal nostalgia or historical trivia, and the Charybdis of regurgitating current fashionable industry trends or platitudes. Relevance, in my view, is only driven by the test of time through proven ability to generate sustainable value accretion, currently and more importantly in the future. My themes have been chosen with these criteria in mind and solely represent the personal judgment (or lack thereof) of the writer.

Banking, in all its forms, is a risky business, essentially based on third party trust and funding. It must therefore balance its risk appetite and actions to ensure deposit protection and readily available funds while generating sufficient returns to satisfy the demands – oftentimes excessive – of shareholders, management and other stakeholders. De-risked banking – as postulated by regulators in the aftermath of every crisis – can only exist when these constituencies accept utility type risk-returns, and this has not, and is not likely to, happen.

Adel El-Labban was Group Chief Executive Officer of Ahli United Bank from 2000 until early 2023. Before that, he led Commercial International Bank in Egypt. In 2015, Mr. El-Labban received the Arab Bankers Association’s annual award for Distinguished Service to Arab Banking. He has also received distinguished achievement awards from Euromoney and the Union of Arab Banks. He currently divides his time between Bahrain, London and Egypt.

Effective risk frameworks

Accordingly, the first future truism is the need for very effective and dynamic risk identification, monitoring, measurement, management and remediation frameworks. These should be properly implemented by qualified bank staff with sufficient independence to withstand the inevitable pressures from their peers in revenue centres. The key pillars of this approach are a full buy-in by a competent Board and qualified CEO, advanced MIS and forward-looking data analytics to ensure a real time – not post fact – enterprise wide holistic risk vision, and lastly a continuing commitment to the long-forgotten magic potion of common sense and reality checks at all levels. If greed negates common sense and avarice overrules informed independent judgement, it is a matter of ‘when’ not ‘if’ the ship hits the rocks, as seen with many regional and international banks over the years.

Being sustainably profitable within a low risk (‘boring’) business operating profile is the ultimate accolade for any successful business. However, this requires a major mind set revision which does not appear to be taking hold as the banking industry continues its repetitively myopic scramble to boost returns through quantitative increases in risk assumption while ignoring or failing to properly understand and harness the major opportunities provided by data and technology, the two great modern enablers, to achieve its profit aspirations at lower, not higher risk levels.

Avoiding funding meltdowns

The second future truism is the continuing absolute primacy of banks’ funding activities over their asset mobilization operations. Banks typically fail for liquidity reasons, not because of provisions eroding their capital adequacy.

Liquidity crises are sudden massive coronary attacks resulting in quick financial demise as happened to Bear Sterns and Lehman Brothers in 2008 and to Silicon Valley Bank (SVB) and Credit Suisse in 2023. Only unprecedented government interventions at very high economic costs contained the list of failed banks and averted systemic meltdowns. The avoidance of funding disruptions is therefore the present and future crux of banking prudence and successful continuity. The rapid timing and pace of liquidity crises has been exacerbated by digital technology facilitating instantaneous large withdrawals by clients through e-channels, as seen in the recent spate of US regional bank failures.

Despite this truism, banks have been, and continue to be, predominantly run with an asset-focused mentality. Funding availability, growth, diversification and costs are rarely recognised to the same extent by the industry in its annual awards and plaudits, or by the individual institutions in setting their internal strategic priorities and/or their remuneration policies, despite their critical importance. This entrenched asset bias creates and maintains the seeds of future similar problems arising, as the quicker and easier path of increased risk assumption to bolster profits is preferred, at the expense of the safer, slower and albeit more difficult liability-focused approach. To be clear, all banks adopt both approaches, but the degree of time, investment, management commitment and compensation allocation between them requires serious re-balancing if more sustainability in earnings is to be achieved.

Capital adequacy

My third truism centres on capital adequacy. Its erosion is usually a consequence of misjudged risk decisions or, to a lesser extent, is due to lack of control on costs or on dividend pay-outs. Although it enjoys voluminous coverage under the Basel guidelines, capital adequacy however represents a slower type of banking ailment which can oftentimes be delayed, massaged and even disguised by creative accounting measures of over accommodative external auditors, and can even at times be overlooked by regulators or their governments seeking to defer or hide any signs of banking instability or economic stress. Capital gaps, unlike their liquidity equivalents, are not mortal events so long as depositors do not panic and continue to trade normally with the bank. I am not arguing that undercapitalization is acceptable or is not a relevant financial and regulatory measure of financial good health but only that its consequences should be put into proper context in the overall spectrum of banking risks and failures, based on actual bank failure experiences.

The regulatory landscape

My penultimate point is on the regulatory landscape. Supervision under the Basel aegis has exponentially mushroomed, annually complemented with new thematic launches which are often of debatable value to large segments of the industry. This raises a number of questions: has the current age of regulatory overflow reduced systemic risk? Has a safer more growth-conducive banking and economic environment been created? Has the ‘one size fits all’ approach dominating most regulations been effective? Are key banking regulations fair and even handed across and within countries? Is regulatory independence a free pass to commit errors with serious long term economic consequences, at no risk of accountability to the responsible regulators for their well-established failures? Are consumers receiving better and fairer value from banks?

For a pre-Basel 1 banker, the answer is, on balance, an emphatic ‘no’ to all the questions above with the possible exception of the consumer protection issue where the pendulum has over-swung to the other extreme. A regulatory regime based on the quantum of rules, not necessarily on their logic and value, a regulatory regime without any form of real internal or external accountability, a regulatory regime with no economic outlook flourishing in a culture of fear and intimidation is a double-edged sword. It generates an atmosphere of bureaucratic compliance not understanding, of obedience not initiative, of token dialogue not real consultation, and this is adverse to healthy growth and even to the realisation of its key goal of systemic risk containment, as proven by the very recent US regional banks’ collapse and by the demise of Credit Suisse which triggered immediate fears of a global systemic banking crisis.

Clarity of vision

My point is a challenge to regional banks’ vision and governance. Simply put, vision is clarity on the future nature of the business and its expected results. This is the core foundational responsibility of the Board and management team. Hiring external consultants to advise on strategic options or to hold hands for their implementation is usually the first step towards underperformance if not outright failure. It practically signals the inability or unwillingness of the Board and management team to prepare, sanction, own and implement a coherent plan based on a rational assessment of available alternatives of which they are the most familiar in terms of potential challenges and opportunities. Without clarity of vision and ownership at all levels of the organisation, full staff engagement, coordinated initiatives and optimised results become random occurrences.

Governance at the Board level cascading into all levels of the organisation is the other critical missing link. A board failing to require, own and pursue the needed actions to maximise its shareholders’ value in terms of risk, liquidity, capital, data and technology policies and initiatives, will not realise the potentialities of any business. A management team not actively engaged in the formulation, modification and execution of these decisions, and objectively held accountable for their proper delivery, will not optimize results in a sustained manner nor will be capable of effectively interacting with their staff and other stakeholders

Data and technology are today’s great enablers. Their importance cannot be overstated. Investing in these capabilities is however a necessary but not sufficient condition for creating competitive advantages. These investments must be undertaken in the context of a full enterprise-wide transformation plan and not as a series of disjointed initiatives with no clear goals and without sufficient ownership by their final Owner-Users outside the data and technology departments. The human transformation at the Board, management and staff levels is the indispensable sufficiency factor needed to reap a full harvest through real organisational transformation. These key future requirements cannot be achieved without enlightened vision and defined governance.

If proper ownership and delivery of vision and governance can be achieved or at least materially improved, regional banks will be positioned to significantly grow within and outside their home markets in a prudent and profitable manner, to leverage and monetise the major opportunities afforded by data and technology in a defined and targeted fashion and to chart their future courses of action with enhanced clarity, accountability, sustainability and scope for profitable innovation. Regional banks have long been losing global market share on all fronts despite their nominal growth and the sustained surge of mineral wealth over decades. This counter intuitive outcome can perhaps be altered if some of the root causes described above are addressed.

If understood and implemented, these notes can hopefully be a starting point to a better future.

First appeared in the September 2023 Edition of Arab Banker, the annual publication of the London Arab Bankers Association

Mr. Fareez

Executive Insights: Jordan Central Bank Governor Ziad Fariz

The governor of the Central Bank of Jordan talks with Global Finance.

Global Finance: How was 2020 for Jordan?

Ziad Fariz: Jordan’s economy, like most economies in the world, is projected to witness negative growth in 2020, which would make it the first time to happen in 30 years. We are expecting GDP to record a 5% contraction, compared to a pre-crisis growth forecast of 2.1%. At the same time, we are forecasting a rebound in 2021, driven by a lower energy bill, the resumption of macroeconomic and structural reforms and a gradual recovery in external demand. We also envisage a recovery in workers’ remittances and travel receipts.

GF: What was your response to the Covid-19 crisis?

Fariz: The pandemic resulted in exceptional challenges, with deep socioeconomic consequences. These challenges drew extraordinary response. The CBJ has undertaken a comprehensive set of measures of 2.5 billion Jordanian dinars ($3.53 billion), or 8% or GDP, aimed at supporting banks’ liquidity, enhancing economic activity and preserving jobs.

The CBJ measures allowed banks to postpone installments due and restructure loans to their clients without charging any extra commissions or delay interest, reducing regulatory reserve ratios to 5% from 7%, cutting interest rates on all monetary policy tools by 150 basis points and activating various tenors of repo repurchase agreements up to 12 months. Moreover, allowing banks to postpone dividend payment for fiscal year 2019 was aimed at strengthening their capital buffers.

The CBJ took an additional JOD1.2 billion of measures to support vital economic sectors, through improving lending conditions with the CBJ’s refinancing program. In particular, lowering lending rates to reach 1% for projects inside the Amman governorate and 0.5% for projects in other governorates; expanding the repayment period to 10 years, of which two years are a grace period; raising the financing ceiling for each projects to JOD3 million for all targeted sectors, while keeping the ceiling for both renewable energy and transportation sectors at JOD4 million; expanding the program’s coverage to allow financing of operating expenses including payrolls, in addition to working capital; and finally, including export financing among the objectives of the program.

Likewise, the CBJ has launched a new financing program amounting to JOD500 million during April 2020. The program is designed to finance the operating expenses and working capital of SMEs [small and medium-size enterprises] sector, including professionals and craftsmen. The program’s disbursements until the end of August 2020 were JOD430 million, of which 40% was directed to payrolls.

GF: What are the lessons learned from this crisis?

Fariz: The pandemic has changed our perception of many issues, including the importance of self-reliance, digitization of the economy and financial transactions, financial inclusion, the problem of the informal economy, as well as the importance of having appropriate margins to hedge and mitigate the impacts of unexpected shocks, whether for government or financial institutions.

The crisis has revealed potential economic opportunities where Jordan has a comparative advantage. Among these are information technology, food industries, logistics and consulting services and pharmaceutical industries. More focus can be placed on these sectors to support economic growth.

GF: Aside from Covid-19, what are the biggest challenges for the Jordanian economy?

Fariz: The geopolitical tensions continue to impact our economy, including the influx of Syrian refugees, the unstable flow of energy sources, and declining domestic exports and foreign direct investment inflows. The tensions have created considerable financial and economic burdens, leading to a slowdown in economic growth and job creation, which in turns pushed the unemployment rate up to 19.1% at the end of 2019. Instead of reverting to protectionist trade policies, the current situation requires greater international cooperation and coordinated monetary and financial policies.

GF: Where do you see opportunities for Jordanian banks?

Fariz: The banking sector in Jordan is sound and resilient, supported by strong financial indicators, including a high capital adequacy ratio, a comfortable level of liquidity and a low ratio of nonperforming loans.

In fact, the pandemic has revealed several opportunities, including the importance of the adopting wise, dynamic and conservative business models. We need to leverage technological innovation, accelerate digital transformation, activate electronic banking channels and expand our pool of targeted financial consumers to achieve financial inclusion, and thus contribute positively to economic growth and development.

محمد-الإتربي

MSMEDA, Banque Misr sign EGP 500m worth microfinance contract

Published 05 Oct,2020 

The Micro, Small and Medium Enterprises Development Agency (MSMEDA) and Banque Misr have signed a microfinance contract of EGP 500m to support micro-projects across Egypt.

The contract was signed by Minister of Trade and Industry and MSMEDA Executive Director Nevine Gamea and Banque Misr Chairperson Mohamed El Etreby.

It comes as part of the World Bank agreement entitled “Stimulating Entrepreneurship to Create Jobs”.

Gamea said the contract comes in accordance with the Egyptian government’s directives that MSMEDA coordinates with various development partners to support micro-projects in Egypt.

It will support the Central Bank of Egypt (CBE) and Egyptian Federation for Microfinance initiative to expand the provision of funding to NGOs and micro companies. This aims to help them provide their financial services to the largest number of citizens.

Gamea pointed out that the agency’s activities and its various plans take into account the particular focus on women and youth to ensure they are economically empowered.

The percentage of projects allocated to women in this contract stands at about 30% of the total funding. About 10% is directed to women over the age of 35, and 30% to youth aged between 21-35 years old.

The minister indicated that EGP 50,000 will be granted per loan, and that about 33,000 micro-projects will be funded during the project’s implementation across the country.

She praised the cooperation in the microfinance field between MSMEDA and Banque Misr, which began in 2011. The total number of contracts that the two sides have signed currently stands at about EGP 1.3bn, through which 205,000 micro-projects received EGP 2.5bn through the bank’s branches.

Mohamed El Etreby said that Banque Misr attaches great importance to the small, medium, and micro enterprises sector, by providing all financial and non-financial services to meet the needs of this sector’s clients.

He explained that Banque Misr is one of the first banks that adhered to the requirements of CBE and reached 20% of the bank’s credit portfolio, with its positive impact on the national economy, indicating that this coincides with the directives of CBE and the state’s efforts to advance in this sector, to improve economic indicators, increase economic development rates, encourage local products, and reduce the import bill.

الشيبي

QIIB awarded prestigious Certificate on Information Security for 5th year in a row

For the fifth consecutive year, QIIB has been awarded the highest certificate in the protection of banking cards data also called the Payment Card Industry Data Security Standard v 3.2.1 (PCI-DSS), granted by SISA, a Forensic driven Cyber security specialist company headquartered in Bengaluru, India.

This certificate is of particular importance given the unusual circumstances that the world is facing this year and the increasing challenges in combating attempts to hack and avoid scams as well as the customers’ growing dependence on payments via bank cards.

On the occasion, QIIB Chief Executive Officer Dr. Abdulbasit Ahmad Al Shaibei said: “We are pleased to meet the exceptional standards in the protection of our customers’ data. QIIB invested heavily in cybersecurity and its various solutions. Being awarded the PCI-DSS certificate proves that we are on the right track. We will continue to focus greatly on this aspect, which is deemed crucial for our banking operations and our various banking channels.”

He said, “Interest in providing technological solutions is no longer a luxury, but rather an urgent need that must be met constantly, while adopting the highest security posture and take advantage of the achievements made in the field of cybersecurity to protect from hacking attempts and electronic crimes, which unfortunately are becoming increasingly complicated and are target various facilities and institutions. Thus, our response should be above par, so as to protect the data of our customers and the security of our transactions in accordance with the highest standards”.

Dr. Al Shaibei affirmed, “QIIB assures its customers that the security of all their data and transactions is at the top of our priorities, in line with the best global standards, so as to serve the interest of our customers, enhance mutual trust and provide a safe technological environment for the prosperity of the local business environment”.

QIIB CEO thanked SISA, the leader in information security and customer data protection, stressing that the bank will continue to work closely with the company in order to benefit from its expertise and solutions in the field of cybersecurity.

SISA CEO and Founder, Dharshan Shanthamurthy, said: “Congratulations to QIIB’s team on achieving PCI DSS certification. Maintaining such an exhaustive international benchmark is not a one-off activity but an ongoing process.”

QIIB was established in 1990 as the second Islamic bank in Qatar and is currently the third largest Islamic bank listed on the Qatar Stock Exchange in terms of assets and market value. The bank has several regional and international partnerships and was able to make a qualitative leap in the development of its technological structure and alternative channels, thus enhancing the banking services its provides to the next level.

This certificate is of particular importance given the unusual circumstances that the world is facing this year and the increasing challenges in combating attempts to hack and avoid scams as well as the customers’ growing dependence on payments via bank cards.

On the occasion, QIIB Chief Executive Officer Dr. Abdulbasit Ahmad Al Shaibei said: “We are pleased to meet the exceptional standards in the protection of our customers’ data. QIIB invested heavily in cybersecurity and its various solutions. Being awarded the PCI-DSS certificate proves that we are on the right track. We will continue to focus greatly on this aspect, which is deemed crucial for our banking operations and our various banking channels.”

He said, “Interest in providing technological solutions is no longer a luxury, but rather an urgent need that must be met constantly, while adopting the highest security posture and take advantage of the achievements made in the field of cybersecurity to protect from hacking attempts and electronic crimes, which unfortunately are becoming increasingly complicated and are target various facilities and institutions. Thus, our response should be above par, so as to protect the data of our customers and the security of our transactions in accordance with the highest standards”.

Dr. Al Shaibei affirmed, “QIIB assures its customers that the security of all their data and transactions is at the top of our priorities, in line with the best global standards, so as to serve the interest of our customers, enhance mutual trust and provide a safe technological environment for the prosperity of the local business environment”.

QIIB CEO thanked SISA, the leader in information security and customer data protection, stressing that the bank will continue to work closely with the company in order to benefit from its expertise and solutions in the field of cybersecurity.

SISA CEO and Founder, Dharshan Shanthamurthy, said: “Congratulations to QIIB’s team on achieving PCI DSS certification. Maintaining such an exhaustive international benchmark is not a one-off activity but an ongoing process.”

QIIB was established in 1990 as the second Islamic bank in Qatar and is currently the third largest Islamic bank listed on the Qatar Stock Exchange in terms of assets and market value. The bank has several regional and international partnerships and was able to make a qualitative leap in the development of its technological structure and alternative channels, thus enhancing the banking services its provides to the next level.

د الهاشل

Mohammad Y Al-Hashel: Lives and livelihoods, a delicate balance

Speech by His Excellency Dr. Mohammad Y Al-Hashel, Governor of the Central Bank of Kuwait and Chairman of the Higher Steering Committee for Economic Stimulus, Kuwait, 4 June 2020.

Taken aback by a pandemic the world had not seen in seven decades, we are left with no choice
but to do our best to protect lives. Hurriedly and feverishly imposed measures, as extreme as
total lockdowns, brought about the worst global recession since the Great Depression of the early
20th century. Forecasts suggest a drop of 3-5% in gross domestic product, while growth in Europe
is forecast to go down 8-12%. With unemployment hitting unprecedented highs, 1.6 billion
workers are negatively impacted by the pandemic. The International Labor Organization expects
a loss of around 305 million full-time jobs in the second quarter of 2020, and estimates that one
of six young people is now out of the job market as a result of the pandemic. And as companies
continue to suffer, more are going out of business and this phenomenon would blow up even
further. The Organization expects that the “Lockdown Generation” would face even higher
unemployment and lower pay for the next five years. These factors combined lead to uncertainty
regarding the true extent and severity of the crisis, causing fear and panic among consumers,
investors, and the business sector as a whole, intensifying further the economic and social impact
of the pandemic.

Mr. Rifai

Suez Canal Bank to launch EGP 250 mn money market fund this month

Suez Canal bank to launch EGP 250 mn money market fund this month: The Suez Canal Bank will this month launch its first money market fund, Suez Daily, with EGP 250 mn in capital, the local press reports. The fund will offer daily subscriptions in short and medium-term financial instruments including bonds, treasury bills, bank deposits, and savings certificates, Chairman and Managing Director Hussein Rifai said.

CI Capital Asset Management, CI Capital Holding’s subsidiary, will manage the fund.

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