Company snapshot: Arab National Bank

Date established 1979

Main business sector Banking

Main business region Saudi Arabia

Chief executive officer Robert Eid

Arab National Bank structure

Arab National Bank was formed in mid-1979 and has grown to become one of the largest banks in Saudi Arabia.

Its ownership is split between Arab Bank of Jordan, which holds 40 per cent, Saudi Arabia’s General Organisation for Social Insurance, with a 10.8 per cent stake, and a 33.7 per cent free float.

Through Arab Bank, it has links to other banks in countries including Lebanon, Syria, Oman, Turkey, Australia and Switzerland.

Arab National Bank in numbers
Segmental income breakdown, 2009
Retail 39
Treasury 22
Corporate 20
Other 17
Investment and brokerage 2
*=As at 30 September 2010
Source: Arab National Bank

The management of Arab National Bank is structured along business lines, with a large retail banking arm for individual customers, and a corporate banking business, which oversees corporate and institutional clients, small to medium-sized businesses and the bank’s London branch. The bank also has a treasury division, as well as an investment and brokerage service.

Robert Eid, as chief executive officer of the bank, is in charge of the management team and the day-to-day operations of the bank. He also sits on the 10-member board of directors for the bank. Arab National Bank employs more than 3,600 people, 91 per cent of whom are Saudi nationals. The bank has paid-up capital of $1.73bn.

Arab National Bank operations

Arab National Bank is a full-service bank operating in the retail and corporate sectors. It has a well-developed retail franchise, the result of a long investment drive in the sector.

Its financial results for 2009 show that retail banking made up 39 per cent of total profit, giving the bank a well-diversified income stream between retail banking and investment banking activities.

Total assets SR bn
2005 67.492
2006 78.035
2007 94.468
2008 121.307
2009 110.297
2010* 101.374
*=As at 30 September 2010. 
Source: Arab National Bank 

The retail arm of the business operates through nearly 250 outlets, including 31 ladies sections and one branch in London. As part of the regulations introduced by the Capital Market Authority in 2007, the bank spun–off its investment banking arm into subsidiary Arab National Bank Investment Company.

The bank has also established several other subsidiaries to gain access to new markets. These include Arabian Heavy Equipment Leasing (AHEL), which offers heavy equipment leasing to the construction industry in a sharia-compliant structure, and mortgage provider Saudi Home Loans (SHL). Arab National Bank owns 62.5 per cent of AHEL, with other shareholders including Athens-based Consolidated Contractors Company. SHL is a joint venture of the International Finance Corporation, a division of the Washington-based World Bank, and the local developer Dar al-Arkan.

Arab National Bank ambitions

Arab National Bank has developed a strong retail banking presence and plans to continue to grow this side of the business. The merits of this strategy have been clear over the past 18 months, when retail assets have continued to perform well, while problems arose in the corporate loan book related to high-profile debt defaults at local conglomerates Saad Group and AH Al-Gosaibi & Brothers.

In common with many Saudi banks, Arab National Bank has no strategy to expand outside the kingdom. Instead it will focus on continuing to benefit from the government’s spending drive.

Profit SR bn
2005 1.828
2006 2.505
2007 2.461
2008 2.486
2009 2.367
2010* 1.609
*=As at 30 September 2010
Source: Arab National Bank

With huge investment spearheaded by Riyadh to develop the economy and start to provide jobs for the kingdom’s growing population, there are plenty of opportunities for Arab National Bank to grow its business.

The bank is also pursuing new revenue streams through the establishment of joint ventures in construction leasing, insurance, and home finance sectors. If these businesses are a success, it will offer the bank an even more diversified range of income.

The bank has a strong business in the project finance sector and will continue to grow this area, as activity in the project sector in Saudi Arabia picks up as a result of state spending.

An anticipated pick-up in credit growth will also help the bank grow its assets in 2011.