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EgyptEgyptian Arab Land Bank Exits Jordan Amid Regulatory Challenges
2 min
The Egyptian Arab Land Bank plans to exit Jordan, selling its 16 branches there.
Central banks of Jordan and Egypt approved the sale, spurring local banks' interest.
Regulatory hurdles, not profitability, drive the decision, needing 20 million dinar capital increase.
Stringent capital requirements in Jordan challenge the bank’s continued operation.
The development highlights the pressure on smaller banks from tight regulations globally.
Egypt's state-owned Egyptian Arab Land Bank is set to depart the Jordanian market and has placed all sixteen of its Jordan-based branches up for sale, according to reports from Alsharq Business. This significant withdrawal follows approvals from both the Central Bank of Jordan and the Central Bank of Egypt, giving the green light for due diligence and asset valuation to kick off.
There's been plenty of chatter around this move among financial circles, with at least five Jordanian banks reportedly lining up to purchase these branches. Predictably, such a sizeable sale has attracted strong local interest, prompting banks to quickly make preliminary bids.
So, what's behind this decision to pull out? Well, Arageek readers might find it interesting that the shift isn't due to profitability concerns but rather regulatory hurdles. The bank is currently faced with Jordan's stringent capital regulations that require a hefty increase in capital investment. Specifically, the Central Bank of Jordan's rules mean the Egyptian Arab Land Bank would need an additional 20 million Jordanian dinars, pushing the total capital to approximately 70 million dinars. Clearly, the cost of continuing operations has prompted management to reconsider its stance in the country.
This capital adequacy requirement—basically, ensuring banks have sufficient cash reserves to safeguard their customers in turbulant times—is prompting a thorough rethink of foreign branches. Ultimately, this regulatory tightening seems to have swayed the Egyptian bank towards exiting the Jordanian banking landscape altogether.
It’s certainly an interesting development—banks have been navigating increasingly tight rules in many countries, and while ensuring customer safety and global financial stability are obviously positive goals, we often see this causing friction for smaller or overseas players. Observers will no doubt be keeping an eye on the outcome and seeing how smoothly this particular exit plays out.
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