Arab Bank logo.
(photo credit: Courtesy)
Jordanian lender Arab Bank Group said it had begun legal steps to appeal a US jury ruling which found it liable for financing Islamic militant group Hamas.
The US civil lawsuit brought against the Jordan-based bank has been described by lawyers as the first of its kind to reach trial. Jurors last month found it was liable for giving material support to Hamas and said it must compensate victims of two dozen attacks attributed to the group in Israel and the Palestinian territories.
Chairman Sabih Masrii said the bank was preparing an appeal against the verdict that it described as unjust and exposed not just the bank but others to "enormous liability" for providing routine services.
"We have started the preliminary actions for the submission of the appeal which is expected to take over a year. The bank has taken the appropriate measures to deal with the situation," Masri said in a statement announcing the bank's nine month results.
Similar lawsuits are pending in New York against Bank of China Ltd, which is accused of providing services to Palestine Islamic Jihad, and Credit Lyonnais SA, which is accused of aiding Hamas. Those banks have denied the allegations.
Jordan's central bank has strongly backed the country's largest lender, the main pillar of the financial system with a balance sheet of $46.4 bln and with a regional reputation of conservative banking practices and risk shunning.
Central Bank officials say the bank is financially sound with a strong level of capitalization with a capital adequacy ratio of 15 percent and a very strong liquidity position.
US ally Jordan is in debt to the tune of $28 billion and is finances are stretched by the costs of accommodating over one million Syrian refugees.
Senior officials have also cautioned the U.S. treasury of the implications of what they saw as a "politically inspired rulings" on future Arab investments in the United States.
The bank announced that its nine-month net profit rose 10 percent to $614 million compared to last year, attributing it to a diversified portfolio with growth in key markets and a prudent risk strategy.
Total loans rose 2.2 percent to $23.7 billion at end-September, while deposits grew 3.5 percent to $34.1 billion compared to the same period last year.
The bank gave no figures for third quarter net profits.
Arab Bank, whose geographic spread over 30 countries in five continents has diversified its operations and minimized risk, owns 40 percent of Saudi Arabia's Arab National Bank ANB.
Investment analysts say the bank has traditionally had a lower risk appetite than its rivals and it favors capitalization and liquidity versus profitability.
Arab Bank's growth has long been tied to its regional and global expansion, and it has a reputation for withstanding political upheaval.
The firm is one of the Arab world's largest privately owned banks. More than 20 percent is owned by the family of Lebanon's former prime minister, Rafik al-Hariri, who was assassinated in 2005. Jordan's state social pension fund holds a 15.5 percent stake.