Ahmed Abdullatif, the president and chief executive of Arab Banking Corporation (ABC), says he is leaving the Arab world’s biggest bank when his two-year contract expires in March 1997.
‘My original contract with ABC was only intended for two years. I have decided that I will not renew it,’ Abdullatif told MEED on 6 November. ‘I will be going back to Saudi Arabia to attend to personal business.’ Abdullatif declined to comment on why he has decided to leave the job which he took in 1995 after the departure of ABC’s founder, Abdullah Saudi.
With assets of $21,517 million in June of this year, the Bahrain-based ABC is a key player in Arab trade and corporate finance. It also has a presence in Western Europe, Latin America and Southeast Asia through a number of subsidiaries, the biggest of which are Banco Atlantico of Spain and International Bank of Asia (IBA), which is based in Hong Kong. The news of Abdullatif’s departure coincides with ABC’s appointment of an international consultant to review its strategy (MEED 8:11:96).
ABC was founded by Saudi in 1980 as a pan-Arab bank with a global network. Its equity structure reflects this concept: 75 per cent of its shares are owned by Kuwait, Abu Dhabi and Libya and the rest is traded on the bourses of Bahrain, Kuwait and Paris.
The bank’s Libyan connections caused it to fall foul of the US, which regards Libya as a sponsor of terrorism. Saudi, a Libyan, resigned from the bank in 1994 after US political pressure, and the Libyan shareholding was put into trust in Bahrain.
Abdullatif, a former managing director of Saudi Arabia’s Riyad Bank, was perceived as a ‘safe pair of hands’ to run ABC after Saudi’s departure, analysts say. They add that the bank has largely recovered from bad debt problems dating to the 1980s and the Gulf War, and could be well-placed to benefit from the growth of niche markets like Islamic banking and trade with Southeast Asia. However, ABC’s return on assets, though improving, is still one of the lowest of the Gulf’s banks.
In a separate development, IBA is increasing its capital by about $64 million through an issue of new shares. IBA had total shareholders’ funds of $200 million at the end of 1995. ABC and a unit of China’s Everbright Holdings will buy 109.9 million new shares, keeping their equity stakes at 55 per cent and 20 per cent respectively. IBA is also selling 27.5 million existing shares.