ITS economy is a disaster, its political future uncertain, but Jordan’s banks are falling over themselves to reopen their branches in the emerging Palestine.

Their enthusiasm is ‘all based on expectations,’ says one banker. ‘They think there is a gold mine there. The Cairo-Amman bank has had it for six years, now they want a share.’

Gold mine or not, the occupied territories could have eight Jordanian banks, and a number of new Palestinian institutions, operating within months. Six Jordanian banks have already received Central Bank of Jordan (CBJ) permission to reopen either one or two branches. Bank of Jordan and ANZ Grindlays will start in Ramallah; Jordan Gulf Bank and Jordan National Bank will open in Nablus; Arab Bank in Nablus and Gaza; and Arab Land Bank in Bethlehem and Gaza. British Bank of the Middle East, which operated one Jerusalem branch, has still to decide on a return.

Limited services

The returning banks will be joining the Cairo-Amman Bank, which has worked in the occupied territories since 1987 and now has eight branches operating throughout the West Bank. Services offered by Cairo-Amman have been limited to deposit-taking and transfers as most other business, even such basics as housing and business loans, have been either impractical or politically impossible.

Fortunately, the returning banks will not have to work under the same restrictions as Cairo-Amman, which is now looking forward to opening new branches and expanding its range of services. According to CBJ deputy governor Michel Marto, the agreement with Israel covering the reopening of the banks ‘is totally different from the one covering the Cairo-Amman Bank….That was one-sided and caused hardship.’

Marto says the CBJ sees the new branches of the banks as an extension of their operations in Jordan and they will be governed by rules ‘as close as possible to our own until the new Palestinian financial authority takes over.’ Marto emphasises that the banks will be able to carry out all normal banking activity although he recognises that there will be difficulties in such a fluid and complex political situation. However, there is no question of more than one authority controlling the banks. ‘There can be only one monetary authority running things in any country,’ he says.

What business can the banks expect to generate? ‘This will follow the peace process,’ says one banker in Amman. He points out that everything is needed but many activities will be possible only when political realities on the ground are clearer.

The banks anticipate that business will be low-key in the early months as they build a deposit base and introduce customers to modern banking practices that have largely passed them by in 27 years of occupation.

Tewfiq al-Khalil, senior manager in the international department of Arab Bank, expects business to be concentrated on infrastructure rebuilding, especially housing and support for job-generating small business. More sophisticated banking instruments will have to wait until the basics are in place, he says.

Unknowns

The real bait for the banks is the promise of substantial foreign aid for infrastructure development and an inflow of Palestinian assets now held abroad once real investment becomes viable. But the volume to be expected and where it will be placed are the biggest unknowns at this stage.

The banks begin with at least one advantage, having maintained their premises since 1967. Bank of Jordan has even completed refurbishment of three branches, although one banker estimates that a 400-square-metre branch that would cost JD 40,000 ($57,000) to establish in Amman will need JD 250,000 ($355,000) in the West Bank.

Staffing is also a challenge. Some banks are already training new recruits, and retraining old staff who have stayed on the payroll since 1967. Palestinian banks hoping to open soon have been advertising in the Gulf and Jordan for qualified Palestinians with West Bank resident permits.

For all the banks, the return is inevitably coloured not just by financial considerations but also by nationalist feeling and prestige. The reopening of the banks will be one of the first concrete expressions of the political changes now under way and no-one wants to be left behind.

ANZ Grindlays general manager Adnan Sallakh believes his bank’s history in the area leaves it no choice. ‘As the Ottoman Bank we were the first bank to open in Palestine in 1905, the first to open in Jordan in 1925. We must be among the first to go back,’ he says.

‘For us it is easy,’ says Arab Bank’s Al-Khalil. ‘It’s our own backyard, our own country. We want to go back to our people to serve them.’ On reflection, Al-Khalil feels it was a mistake not to have gone back earlier. The Arab Bank always insisted it should reopen in Jerusalem first, something the Israelis have still not conceded. ‘We shouldn’t have let our emotions rule over our better judgment. We could have taken better care of our people,’ he says.