The resignation of Abdulla A Saudi from Arab Banking Corporation (ABC), which he founded in 1980, was announced in Bahrain on 28 February. An ABC statement said: 'Notwithstanding record-breaking results for 1993, the board of directors reluctantly agreed with the president and chief executive that, owing to external circumstances, such a decision was necessary to protect shareholders' interests and safeguard the bank's future.'
The departure of the driving force behind the largest and most diversified bank in the Middle East was sudden, but not totally unexpected. No specific reason was given for Saudi's resignation, but the threat of sanctions over the Lockerbie affair was apparently the main factor. As a Libyan national, Saudi's dominant status within the Arab banking community and its largest institution had attracted the attention of US authorities over several years in which an increasing number of institutions with Libyan associations have been blacklisted (see Libya).
Prior to his departure, Saudi would not be drawn on his Libyan connections. In a reference to the latest UN sanctions during an early-February interview, he told MEED: 'Up to today, I don't see any implications.'
There have been reports that other senior Libyan ABC officials will soon stand down to remove the sanctions threat once and for all, but these have not been confirmed. Other senior Libyans within the group include the general manager of the London-based ABC International Bank, Abdulmagid al-Breish.
Saudi will step down from 1 May. A committee is to be formed from within the bank to act as an interim chief executive officer and to choose a successor. It will be chaired by Khalifa al-Muhairy, an ABC board member since 1986 and co-deputy chairman since 1992.
Al-Muhairy is a UAE national. Full details of ABC's shareholding are not available, but the holdings are now about 25 per cent each for the governments of Libya, Abu Dhabi and Kuwait, with the rest held by private investors. Some of these include ABC staff members, who purchased shares through a Bahrain stock exchange offering.
ABC is expected to maintain a discreet silence over the selection procedure, which may not prove easy. Observers say Saudi was a very hands-on manager, dictating policy over a banking empire stretching from Spain to Asia. 'Not grooming a logical successor was part and parcel of the Saudi style,' one Bahrain-based analyst comments.
Given the political sensitivities involved, Gulf bankers say Saudi is unlikely to be replaced by another Libyan. 'In the first instance I will be looking to one of the other major shareholders to provide Saudi's successor, but whatever happens there will be a vacuum,' one regional banker says. 'There are three or four very strong managers within the bank, but ABC was shaped in the style of one man and his huge abilities - and replacing him will not be easy.'
ABC subsidiaries in London and other major centres might provide candidates, but an outside appointment is not ruled out. Analysts say contenders could include former Kuwait Investment Authority (KIA) head Abdallah al-Gabandi. The ABC group has undergone significant management and strategic changes in recent months (MEED 4:3:94; 8:10:93). It has also been deprived of Saudi's London-based consultant Hikmat Nashashibi, who died on 23 February (see Bahrain).
Analysts believe that ABC subsidiaries and affiliates, including the multinational Arab Financial Services (AFS), will be less affected by Saudi's departure than the main bank. However, the prospect of further major management changes across the group could mean further upheavals for some institutions.
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