A Bank with Heritage and Vision

Arab Banking Corporation (ABC) is a leading universal bank, headquartered in the Kingdom of Bahrain. It was incorporated in Bahrain pursuant to Amiri Decree Law No.2 for the year 1980 on 17th January 1980 with an authorised capital of US$1 billion.

By April 1981, US$750 million had been fully paid by ABC’s original three shareholders: the Ministry of Finance of Kuwait (whose shares have since been transferred to the Kuwait Investment Authority), the Libyan Secretariat of Treasury (whose shares were later transferred to the Central Bank of Libya) and the Abu Dhabi Investment Authority. At the end of 1989, ABC’s authorised share capital was increased to US$1,500 million and in June 1990, paid-up capital was raised to US$1,000 million through an international share offering. In June 2006, ABC’s shares were split $10 to $1 in order to boost trading activities by placing them in the same range as other shares quoted on the Bahrain Bourse. Currently, ABC has over 1,300 institutional and individual shareholders.

At an Extraordinary General Meeting held in April 2008 ABC’s shareholders approved an increase in the authorized capital of the bank from US$1.5 billion to US$2.5 billion and an increase in issued and paid up capital from US$1.0 billion to US$2.0 billion by way of a priority rights share offering to existing shareholders.

Another Extraordinary General Meeting was held on January 28, 2010 to approve an increase in the authorized capital from US$2.5 billion to US$3.5 billion and an increase in issued and paid up capital from US$2.0 billion to US$3.11 billion by way of a priority rights share offering to existing shareholders.

In December 2010 the Central Bank of Libya acquired the 17.2% shareholding of Abu Dhabi Investment Authority in ABC, raising its stake in ABC to 59.37%.

Initial Growth

ABC was one of the first Arab financial institutions to be set up with the aim of utilising global capital resources to become a significant participant in the international financial markets. Since then, it has developed and expanded its activities both within the Arab world and internationally through its global network. ABC offers a wide range of banking products including trade finance, project and structured finance, syndications, corporate and institutional banking, treasury services, Islamic banking and retail banking in the Arab world.

In the 1980s ABC expanded by establishing branches in London, New York, Singapore, Milan, and Paris and representative offices in Rome, Houston, Los Angeles, Hong Kong, Tunis and Tripoli in Libya. ABC also acquired majority shareholdings in ABC Daus & Co GmbH, based in Frankfurt, ABC Banque Internationale de Monaco S.A.M. in Monaco, Banco Atlلntico, S.A. in Spain, International Bank of Asia Ltd in Hong Kong, Banco ABC Brasil, S.A. in Brazil, and Arab Banking Corporation (Jordan). ABC Investment & Services Co. (E.C.) was also formed during this period to act as the Group’s investment banking arm.

Consolidation and Adjustment

This period of rapid expansion ended with the Iraqi invasion of Kuwait, and the ensuing Gulf War, which had a significant negative impact on the economies of the Arab world with the result that between 1991 and 1997 ABC experienced a period of consolidation. In 1991 it established a UK-based subsidiary, ABC International Bank plc (“ABCIB”), to take over the business activities of ABC’s London and Paris branches. Subsequently, it upgraded the Tunis representative office to an offshore banking unit and opened representative offices in Tehran, Cairo, Algiers, and Abu Dhabi.

Reorganisation and Growth in the Arab World

At the end of 1997, ABC’s organisational structure was changed to reflect a new emphasis on the core strengths of the Group. The previous structure, based on geographical regions,
was replaced by a functional structure divided between ABC’s core banking business, the Banking Group, and its international investments. The new structure provided ABC with the benefits of both economies of scale and a specific point of contact within the management structure for each major product offered to its customers.

Following the reorganisation, ABC Islamic Bank (E.C.) was formed in 1998 out of ABC Investment & Services Co. (E.C.) to concentrate the Group’s Islamic banking activities in the Arab world. A new subsidiary, Arab Banking Corporation – Algeria, was also established that year, while ABC increased its stake in Arab Banking Corporation (Jordan) to 86%.

During 1999 ABC continued to expand its network in the Arab world. In July the Tunisian authorities granted ABC an onshore banking licence, permitting the formation of a new bank, Arab Banking Corporation – Tunisie, S.A. (“ABC Tunisie”), which started operations in 2000. ABC acquired 95.8% of Egypt Arab African Bank, S.A.E., Cairo, in November 1999, renaming it Arab Banking Corporation – Egypt, S.A.E. (“ABC Egypt”) in 2000.

In 2000 ABC concluded a further review of its international operational structure, closing its Hong Kong and Rome representative offices.

In 2001 ABCIB incorporated ABCIB Islamic Asset Management Ltd, UK, to complement the activities of ABC Islamic Bank in Bahrain and provide Sharia’a-compliant financial services and products to the rapidly expanding client base in ABC Group’s ‘home’ countries.

Strategic Rationalisation – Core Markets Focus

The rationalisation of the Group’s US presence was completed in late 2002 and 2003 with the closure of the Los Angeles and Houston representative offices and transfer of their marketing responsibilities to ABC’s New York branch. Similarly a review of the business potential in South East Asia, given the Group’s increasing emphasis on the Arab world, led to ABC’s Singapore branch being reorganised in early 2003 as a representative office, with responsibility for marketing ABC’s Asian business, principally trade finance.

Despite the sustained and profitable growth of both Banco Atlلntico and International Bank of Asia, in which ABC had long held controlling interests of 68% and 55% respectively, an in-depth study of strategic options available to ABC in light of the dramatic changes in the global banking industry concluded that it was in ABC’s best interest to dispose of these investments when market conditions were favourable. Subsequently, when such a situation indeed arose, ABC was able to negotiate the sale of these entities, which it successfully concluded during the first quarter of 2004.

These disposals released capital resources to support ABC’s renewed focus on the Arab world, ABC’s origin and home region. The strategic study had identified rapidly emerging opportunities for expansion in the region, where a growing demand for retail banking services, including consumer lending, trade finance and small and medium sized enterprise finance, had created significant potential for growth. The region’s needs, it was determined, could be met by ABC through the creation of a trans-regional network of operating units to complement ABC’s existing strong international wholesale banking franchise.

These events left ABC substantially leaner and more focused than before. ABC’s reorganisation in 1997 refreshed the core strengths of the Group as it shifted from a purely geographically based structure towards a functional structure with an emphasis on ABC’s core banking business, through the creation of separate Banking, Treasury, Credit & Risk, and Administration Groups. In early 2004 ABC began the rollout of an enhanced operational structure that focused on the products and services offered by the Group through a ‘Matrix Management’ approach.
In January 2004 the business activities of ABC’s Milan branch and its wholly-owned Frankfurt-based subsidiary, Arab Banking Corporation – Daus & Co. GmbH, were integrated with ABC International Bank plc, headquartered in London, as part of ABC Group’s European integration strategy, consolidating under one roof and streamlining all of ABC’s units in Europe, with a uniform corporate identity and unified back-office operations. The merged entities continued their established business activities as branches of ABCIB, concentrating mainly on MENA business flows.

Since 2004, ABC has brought together, under unified direction from Bahrain, the various Islamic finance activities that the ABC Group has developed since the mid-1980s. In the institutional and corporate sectors, ABC is a market leader in Islamic liquidity management, asset creation and management, bespoke transaction structuring and the raising of Sharia’a-compliant finance through syndications and sukuk issuance. In August 2004 ABC launched the alburaq brand in the UK in a joint venture with the Bank of Ireland Group to offer Sharia’a-compliant retail financial services to Britain’s Muslim community. In 2006, Lloyds TSB and Islamic Bank of Britain became distribution partners for the suite of alburaq Islamic mortgage products, the widest range available in any western market.

In September 2004 the second pillar of the Group Product strategy was put in place, with the inauguration of ABC’s new Retail Banking strategy, focused on product design, brand positioning and delivery process re-engineering aimed at ensuring successful and sustainable growth at ABC’s retail banking units across North Africa.

In January 2005, ABC International Bank plc opened a representative office in Istanbul, Turkey. At the same time, ABC increased its shareholding in its associate company Arab Financial Services (E.C.), Bahrain, from 36.08% to 43.33%, eventually increasing its shareholding to 54.5%. In June 2005 ABC increased its shareholding in ABC Egypt, from 95.85% to 97.71%, reinforcing its commitment to this market and its desire to foster organic growth at the subsidiary. September 2005 saw the commencement of operations at ABC’s Iraq branch. Meanwhile, ABC Group’s risk management and credit processes were enhanced with the formation of Board Risk Committees at ABC and at each of its major subsidiaries over the course of 2005.

In November 2005, ABC marked the launch of its innovative US$2.5 billion Euro Medium Term Deposit Notes programme with the successful conclusion of its first floating rate deposit note issue - of US$400 million - as the first tranche thereunder, which was approximately 1.5 times oversubscribed. More recently, in July 2006 ABC issued a US$300 million 5-year Floating Rate Deposit Note under the US$2.5 billion Euro Medium Term Deposit Note programme, designed to lengthen and diversify the bank’s funding sources, which was again comfortably oversubscribed.
As part of the strategy of gradual expansion of the ABC Group network, a representative office was opened in Beirut in March 2006, providing Lebanese businesses with increased access to ABC’s international expertise and transaction abilities.

Funding efforts during 2007 were particularly successful, as ABC was able to raise US$500 million under a subordinated loan facility in April, and a further US$1 billion under a syndicated 5 year term loan facility in June.

ABC initiated, in July 2007, a highly successful IPO of its Brazilian subsidiary Banco ABC Brasil that substantially broadened the number of investors in that bank and enhanced its capital base, whilst reducing ABC’s shareholding in the bank from 83.87% to 55.97%.
In 2010, ABC became the first Arab bank to have a presence in Russia through the opening of ABC International Bank’s Moscow representative office.

In pursuing the Group’s strategy of building a substantial MENA retail bank by tapping into increasing regional demand for banking products from a young population, Retail Banking continued its expansion of its distribution network. The Group consists of a network of 77 branches, 168 ATMs and teams of well-trained direct sales agents across Egypt, Jordan, Algeria and Tunisia serving over 100,000 customers who enjoy a wide spectrum of products and services. In order to provide enhanced customer experience, the traditional distribution channels are supplemented by automated distribution touch-points such as Internet Banking and SMS Banking, facilitating anytime anywhere banking. Dedicated customer care centres operate in select geographies.

Across Egypt, Jordan, Algeria and Tunisia, the bank continued its growth trajectory; new branches were opened outside capital cities to cater to a wider segment of the target market.
‘Lifestyle-aligned’ marketing campaigns generated significant new business; while deepening penetration in existing markets ensured customer retention. The campaigns were particularly successful in Jordan, where it achieved notable success in home loan, personal loan and credit card sales while enhancing bank’s brand image and visibility. In Egypt, ABC collaborated with strategic partners such as insurance companies and clubs to distribute bespoke products to address the needs of specific target groups.

Retail Banking has continually maintained its growth momentum, as the Group’s distribution network continued to expand across its existing markets, targeting wider customer segments and striving to offer customers seamless and convenient access to all the Group’s services.
Retail Banking business in Jordan and Egypt continued to expand their suite of products and services, un-veiling innovative products and exciting marketing campaigns designed to address growing customer needs. Meanwhile, in Algeria, post implementation of the new law restricting consumer finance activities, it has realigned its strategy by recalibration of its tactical priorities. ABC Bank in Algeria moved swiftly to diversify its product offering by launching housing loans and Business Financial Services, a new product for small businesses, professionals and the self-employed. In Tunisia, home loan and auto loan products were launched to accelerate growth. Meanwhile,

ABC’s understanding of the markets and the customers it serves combined with expertise in designing products and services to anticipate and meet the growing needs of consumers and the Group’s vision to support an aggressive pursuit of the retail banking business in the MENA geographies provide a distinct advantage for the growth momentum of its retail franchise. 

As the bank also continued to invest in technology to improve efficiency, security and delivery of key business and consumer products and services, plans are underway to further expand the retail business by enhancing the bouquet of products and services through customer-centric product development offered through innovative campaigns and supported by enhanced data-driven decision making capabilities.