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BRATISLAVA — The eurozone's poorer former communist nations, having themselves endured painful market reforms and austerity programmes, are taking a hard line on Greece after its people voted to reject bailout terms.

Estonia, Latvia, Lithuania and Slovakia have long insisted they are too poor to pay for the mistakes made by wealthier Greece and that it should have stuck to the reforms and austerity measures laid out in its massive 240-billion-euro ($273 billion) bailout. 

"I hear some Greeks have pensions over 1,000 euros ($1,100) a month. That's outrageous. I refuse to pay for their debt while they are making fortunes compared to my salary," Bratislava waitress Martina Lelovicova said on Monday in a country where the average monthly salary is 880 euros.

"It's good news for the eurozone. Greeks should leave it, this will only make it healthier," a Bratislava entrepreneur in his thirties who wished to remain anonymous said of Sunday's Greek referendum result.

Slovak Finance Minister Peter Kazimir, the first Eurogroup minister to warn that the Greek 'No' raises the spectre of a "Grexit" or exit from the euro, told reporters: "With the result of the referendum, a possible crisis scenario, the gradual withdrawal of Greece from the eurozone, is unfolding."

Slovakia, an ex-communist nation of 5.4 million people that joined the eurozone in 2009, has suffered stubbornly high joblessness despite brisk economic growth in recent years.

Its leftist Prime Minister Robert Fico insists "Slovakia will not be harmed as a result of Greece and its decision to stay or leave the single currency union", as Bratislava "did not give any cash, only our guarantees" as part of previous Greek bailouts. 

'Bad and worse choices left' 

But not all poorer eurozone members have nothing to lose: Estonian President Toomas Hendrick Ilves tweeted Monday that "Greece's creditors [are] not just banks".

"Eurozone countries poorer than Greece stand to lose up to 4.2 per cent gross domestic product," he wrote. 

Prime Minister Taavi Roivas for his part said Greece "now only has bad and worse choices left" and reforms "are unavoidable". 

"We expect the Greek government to understand the situation and show decisiveness and action within hours," he added.

Having broken free from the crumbling Soviet Union in 1990-91, tiny Estonia and Latvia joined the eurozone in 2011 and 2014 respectively, followed by neighbour Lithuania in January this year. 

All three Baltic states implemented drastic austerity measures to recover from deep recessions triggered by the 2008-09 global financial crisis, paving the way to eurozone entry and stable economic growth, now around 3 per cent in the region.

Estonia, the eurozone's smallest member since 2011, approved an initial Greek bailout but has since said “No” and insists that all eurozone members adopt its strict fiscal discipline.  

Tallinn boasts the eurozone's lowest debt-to-gross domestic product (GDP) ratio of 10.6 per cent.

"Estonians don't really understand the Greek attitude. We are used to saving and living frugally," Merit Kopli, editor in chief of Estonia's leading Postimees daily, told AFP.

Maie Mets, a 72-year-old pensioner, said: "As I understand it, the Greek standard of living is higher than ours here in Estonia. It is only normal that people pay their debts."

'No sympathy' 

Latvia was hit hard by the global financial crisis, suffering the world's deepest recession when GDP shrank by nearly a quarter over two years. 

Yet the nation of some 2 million bounced back after implementing austerity cuts under the terms of a 7.5-billion-euro international bailout it secured to avert bankruptcy. 

"When we went through the international bailout, did anyone come to rescue us?" asked Zenija Lace, a 61-year-old Riga office worker. 

"I have no sympathy for the Greeks. They should have started paying taxes long ago. If they want money from Europe, they should have started saving!" added 59-year-old Riga businesswoman Brigita Petersone. "How is it that we could endure all of it and they can't?"

Separately, Greece leaving the eurozone has tipped over to become the base case for many international bank economists after Sunday's overwhelming “No” vote against further austerity imposed by creditors.

A Reuters poll of more than 70 economists published a week ago, just before Greece defaulted on a 1.6-billion-euro payment to the International Monetary Fund (IMF), placed the median probability of Greece leaving the eurozone at 45 per cent.

Since then, BNP Paribas, J.P. Morgan, RBS, Barclays and Societe Generale, among others, have revised their forecasts for Greece to remain in the eurozone and are now expecting it to leave. 

Other banks, like Investec, have flagged it as a serious risk that may soon become the most likely outcome.

While few put an exact figure on the probability, that suggests the consensus has now risen above 50 per cent, at least among large international bond dealers.

"We argue that EMU [European Monetary Union] exit now is the most likely scenario," wrote economists at Barclays in a note, even before the final referendum results were in.

"Agreeing on a programme with the current Greek government will be extremely difficult for European Union leaders, given the Greek rejection of the last deal offered and will be a difficult sell at home, especially at the Bundestag or in Spain ahead of the general elections."

There was a more muted response to Sunday's vote from financial markets while some other economists were also more sanguine.

"An easier route towards a resolution has been ruled out and therefore the risk of a Grexit has risen," wrote Investec chief economist Philip Shaw, who a week ago put the probability at 35 per cent.

"This is probably not quite our baseline case yet, but it might well be should the signs of a political agreement not become convincing over the next two days," he said.

Several bank economists were confident enough that Greece will leave the euro to forecast it before any political discussions took place.

"It seems more likely than not that Greece will leave the euro at this point, 60 per cent chance," wrote Nick Kounis, economist at ABN Amro, who gave just a 30 per cent probability in the Reuters poll published last week.

"The prospects a deal with creditors have dimmed, and in the meantime the Greek economy will suffer even more severe economic and financial pain," Kounis wrote.

Erik Nielsen, the chief economist at UniCredit, was even more forceful.

"My bottom line is that the outcome of the Greek referendum has significantly increased the risk of Greece leaving the eurozone, which is now by far the most likely outcome. The process may start within days or weeks, but it won't be a smooth ride into a new currency. It'll be chaos with political ramifications,"  he said.

FRANKFURT/BERLIN — Martin Herrenknecht, founder of a company in southern Germany that is a world leader in tunnel-boring equipment, has been carefully preparing for the day when Iran reopens for business.

He recently visited Tehran, meeting officials in the energy ministry and sewage department. Before Western sanctions hit, Herrenknecht, which carries its 72-year-old founder's name, did 10 million to 15 million euros ($11 million-$17 million) of business a year in Iran.

It has maintained an office there, anticipating a day when Iran reaches a nuclear deal with major powers that will put lucrative projects like a long-delayed expansion of the Tehran metro back on track.

"I know what projects are coming and I'm ready to sign when the sanctions are lifted," Martin Herrenknecht told Reuters.

Like a host of other German companies, many of them small-to-medium sized "Mittelstand" firms, Herrenknecht, based in Schwanau in prosperous Baden-Wuerttemberg, is gearing up for a return of the Iranian market.

As talks about a deal with Iran approach a Tuesday deadline, a senior German official said: "It's like a regatta. Everyone is trying to put themselves in the best position to be first when the starting gun sounds."

"They are trying to assess whether the old relationships are still valid. Can they rely on the people they know or do they need to build new relationships?" he added.

Germany has commercial and cultural ties to Iran that go back to the 19th century.

Unlike Britain and Russia, Germany had no imperialist history in the region, making it an attractive partner, and by the late 1930s German firms were involved in almost every major industrial project in Iran including the Trans-Iranian Railway.

But during the years of sanctions, China, the United Arab Emirates, South Korea, Turkey and India have overtaken Germany in Iran trade. German exports to Iran fell from a high of 4.4 billion euros in 2005 to 1.8 billion in 2013.

The German official mentioned Volkswagen and Daimler as among those jostling for position.

Volkswagen (VW) said it had not restarted any business activities in Iran and Daimler said it was closely monitoring the situation although any transactions or re-entry into Iran would depend on the outcome of the nuclear talks.

But a person familiar with the situation at VW, Europe's biggest carmaker, said: "Of course there are talks," adding that the same applied to all potential suppliers. "It's done rather behind the scenes to see what levers one will need to pull."

Pressure

Iran's private sector has been shrivelled by the sanctions, which limited its access to foreign trade, and is hungry for foreign investment and expertise. Its economy is dominated by oil and gas exports and the public sector.

But most executives of publicly listed German companies are still cagey about their interest in Iran, mindful of investors and customers in the United States, which takes a harder line on sanctions than Europe does.

Trains-to-turbines group Siemens, whose history in Iran goes back to the 1867 Indo-European telegraph, stopped doing new business there in 2010 after being slammed for selling equipment that was used to spy on dissidents.

It never gave a reason for its decision but sources familiar with the matter say the Iranian connections had made it harder to win public contracts in the United States.

A Siemens spokesman remarked this week that the company was waiting for an outcome of the nuclear talks before making any decisions about how to proceed there. 

"If something changes, we'll deal with it," he said.

The issue is a thorny one for German politicians too, who are anxious to keep up the pressure of sanctions to make sure a deal is done, while not disadvantaging German industry.

Economy and Energy Minister Sigmar Gabriel is said in Berlin circles to be planning a trip to Tehran this month but the visit has not been confirmed by his ministry.

Outspoken business owners like Martin Herrenknecht, who has built his business from scratch to a billion euros in a few decades, are a nuisance for officials striving for a balance.

A source close to the government recently explained the dilemma: "German industry really wants to pile into Iran. They're worried that if they wait, the French or even Americans will get in before them.

"But if they go in now, the Iranians may decide they don't need a deal as the sanctions are effectively falling away without it," he said. "We are using all opportunities to tell German industry to calm down." 

Elsewhere, Iran's transport minister said recently that there was about $80 billion worth of business up for grabs in his sector, including the renewal of the country's air fleet, but warned France it risked missing out unless it changed its stance towards Tehran.

France is one of six world powers negotiating with Iran over its disputed nuclear programme and has been one of the toughest in pressing for restrictions to prevent it from acquiring an atomic bomb, although it denies seeking one.

All sides are seeking a deal that would reward Iran with relief from international sanctions, meaning it could soon collect debts from overseas banks that may exceed $100 billion.

That has prompted an Iranian diplomatic charm offensive across the world as it looks to attract companies to invest across all sectors, from its ageing hydrocarbon-based energy system to transport and general construction.

"There is no Iran strategy in France, and this is a source of regret," Transport Minister Abbas Ahmad Akhoundi told a conference at the International Diplomatic Academy in Paris. "Sooner or later the nuclear conflict will be resolved and France needs to decide on its position now."

Akhoundi was speaking during the Paris Airshow, where he has been holding talks with executives from French firms including Thales and European planemaker Airbus.

He said Tehran would prioritise civil aviation once sanctions were eased because its ageing fleet risked being "out of service" within the next 10 years.

"We are thinking about regeneration of our air fleet... 300-400 more aircraft worth a minimum of $20 billion," he indicated.

Iran's ambassador to France last month told journalists that Tehran was already negotiating with American firms including Airbus' main US rival Boeing.

Akhoundi declined to comment on that, but said that despite some "dogmatic" views in the West, Tehran did not plan to take retaliatory measures when contracts were eventually awarded.

"There will be international competition, but we will never allow ourselves to be dominated economically by the West again," he said.

Akhoundi indicated that potential investment in the transport sector included $25 billion on improving its rail infrastructure and $30 billion on roads and motorways.

France is considered to be demanding more stringent restrictions on the Iranians under any deal than the other Western delegations, officials have said, although US officials have cautioned that Paris' position privately is not as tough as it is publicly.

A senior French government official said he was not worried about missing out in Iran.

"It's not because you're the first one in that you're the first served," he said. "We'll be ready. Don't worry about French firms."

AMMAN — Real estate trading during the first six months of 2015 amounted to JD3.42 billion, 11 per cent lower than the JD3.84 billion recorded during the same period of 2014.

In June alone, real estate trading dropped by 18 per cent to JD595 million from JD727 million in June 2014, according to report issued by the Department of Lands and Survey (DLS) on Sunday.

As a result of the decline, “revenues during the January-June 2015 declined by 13 per cent to JD182.7 million from JD209.7 million collected in the same period of the previous year.”

The report showed that the value of both revenues and exemptions also went down by 11 per cent at the end of the first half of the year, standing at JD223.2 million, compared with JD251 million.

Similarly, the department’s revenues in June dropped by 20 per cent to JD31 million, compared with JD40 million the department collected in June 2014.

In June, the value of revenues and exemptions stood at JD38.2 million, 18 per cent lower than the JD46.7 million for the same month the year before, the report showed. 

According to the DLS, the estimated value of non-Jordanian purchases in the first six months of 2015 fell by 30 per cent to JD185.1 million, compared with JD265.3 million in the same period of the previous year.

AMMAN — The Ministry of Finance is requesting the approval of the Jordan Securities Commission (JSC) to set up a special purpose vehicle (SPV) for issuing the first sukuk (Islamic finance bonds).

An SPV,  considered the first executive step towards the issuance of sukuk, is established to possess assets and benefits against which Islamic bonds are issued. 

Finance Ministry Secretary General Izzeddin Kanakrieh expects the first sukuk, worth around JD200 million for the benefit of the ministry, to be issued by September.

Kanakrieh said the projects to be financed by sukuk will include government and school buildings, a new Finance Ministry building, and the purchases of the National Electric Power Company and the Water Authority of Jordan.

AMMAN —  Jordan’s net public debt increased by 3.2 per cent to JD21.20 billion at the end of May 2015 from JD20.56 billion at the end of last year.

According to data from the Finance Ministry, the public debt, as a percentage of the gross domestic product (GDP), decreased by 2.7 per cent to 78.1 per cent from the estimated GDP for 2015, compared to 80.8 per cent at the end of 2014.

The ministry attributed the higher amount of debt to the increase of guaranteed loans by the government to the National Electric Power Company and the Water Authority of Jordan during the first five months of this year.

The external debt accounted for 29.6 per cent of the estimated GDP for 2015, compared to 31.6 per cent of the 2014 GDP.

The internal public debt accounted for 48.6 per cent of the estimated GDP for 2015 compared to 49.2 per cent at the end of 2014.

The internal public debt increased to JD13.2 billion at the end of May 2015, compared to JD12.5 billion at the end of 2014.

NEW YORK — US health insurance giant Aetna will buy rival Humana for $37 billion (33.3 billion euros), a statement issued Friday by both companies said, creating a group with estimated annual sales of $115 billion.

Aetna, the second-largest US health insurance player in market capitalisation terms, said it will pay $230 per Humana share in a cash and stock deal to create a new entity with around 33 million customers.

According to agreements approved by both boards, the transaction will leave Aetna shareholders owning around 74 per cent of the new group, and investors with Humana stock with 26 per cent.

The Aetna offer was considerably higher than Humana’s $187.50 share price at Wall Street’s close Thursday.

The move followed frenzied activity in the US health insurance market moving towards consolidation under changes made by President Barack Obama’s landmark Affordable Care Act.

At the end of June, Cigna rejected a $54 billion buyout offer by rival Anthem as part of efforts by insurance companies to increase their size as a means of obtaining stronger negotiating positions with healthcare providers.

Aetna Chairman Mark T. Bertolini described the Humana deal as ‘partially reflecting those changes in the sector, but also aiming to provide improved service to clients at affordable prices’.

If the deal is completed as expected during the second half of 2016, Aetna says its debt-to-capital ratio will rise to 46 per cent, a level company directors say they will bring down to 40 per cent within two years.

AMMAN — Factories belonging to the Middle East Complex Engineering Electronics and Heavy Industries (MECE) are now the property of Jordan Commercial Bank (JCB).

MECE, a company registered to produce, trade, distribute, and export electronic and electric home appliances in collaboration with other electronic companies, informed the Jordan Securities Commission (JSC) last month that, based on a court ruling, the factories were registered in the bank’s name on June 18, 2015.

In its disclosure to the JSC, the company said JCB was among 28 banks that agreed and signed a memorandum of understanding for settling MECE’s indebtedness since 2010 when troubles began.

“Terms and privileges obtained by JCB were much better than those given to other creditor banks, with their consent, because JCB held hypothecations in its favour,” the disclosure added.

Noting that JCB was a member of MECE’s board of directors from September 6, 2011, until September 3, 2013, the company stressed that the bank was fully aware all along of the developments and stages of progress with other bank creditors to arrive at a settlement to MECE’s indebtedness.

According to MECE, the bank was also knowledgeable about the restructuring programme slated for implementation in an integrated entirety that guarantees the interest of all stakeholders.

JCB Vice Chairman Ayman Majali told The Jordan Times that for five years, MECE’s management was untrustworthy and unable to deliver despite repeated promises.

“We tried to help the company in various ways but to no avail because the situation was one of indecisiveness and unreliability,” he said, emphasising that the bank was not in the business of seizing and selling properties.

“JCB is now trying to find serious investors who are willing to restart operations because the factories have been idled for months,” Majali added, attributing the company’s troubles to mismanagement.

He noted that MECE’s administration was not focused on the industrial production and the strength of the company which was crippled by over JD100 million of debt. 

MECE said the bank initiated the process to publicly auction the factories on August 21, 2013, while still member of its board of directors and even after the company repaid certain amounts agreed on in a memorandum of understanding.

“Because JCB had a hypothecation in its favour, it unilaterally went to court to initiate the auctioning process and was the only bidder,” MECE added in the disclosure.

Majali said the bank took possession of the factories with a JD23 million bid because, under Jordanian law, it could not exceed 50 per cent of the collateral’s value which was estimated at JD46 million. 

JCB’s vice chairman noted that the cost to the bank was JD25 million when various fees and taxes were taken into consideration.

“JCB continued expropriating the company’s factories and equipment [for a meager amount though within the prevailing law] in settlement of its individual credits instead of cooperating and joining for a group solution comprising all banks as sought,” MECE said.

It added: “Since the crisis started in 2010, there was and still is an actual, practical, moral and legal consensus and common objective among all  the 28 creditor banks that the solution to the crisis be collective.”

The company mentioned in the disclosure that to safeguard all stakeholders, whether shareholders, workers, banks, creditors, investors  (Jordanians, Arab or others), and  public funds, no bank was to act alone against the interests of the company, its assets and progress.

MECE indicated that, within several attempts and meetings with JCB to arrive at an amicable settlement, a written offer was made on May 27, 2015 that was better than all what was previously proposed, discussed or even signed with the bank or agreed on with the other creditor banks.

According to the disclosure, JCB was repaid a certain amount in April 2013, based on a memorandum of understanding dated March 14, 2013, when it impounded specified plots of land, other than those of the factories, because the bank had a priority and an immediate implementation for repayment over others.

Even after this repayment, the company said, JCB unilaterally recovered more funds by debiting MECE’s accounts at subsidiaries without the customary legal procedures, like asking the original borrower or notifying the guarantor.

In the disclosure, MECE Chairman Ayman “Mohammad Ali” Al Khalili described the JCB measures and actions as arbitrary in terms of exercising authority, and unjust to the rights of others.

Al Khalili blamed the JCB for causing considerable harm to the rights of shareholders and damages to the company, its continuity and the workers.

“[JCB conduct] was the main cause behind delaying and obstructing MECE’s restructuring programme and settling its indebtedness to the remaining creditor banks,” he wrote.

The chairman held JCB responsible for harming Arab investment, particularly the Kuwaiti, in Jordan and assured shareholders that MECE will not save any effort to regain its full rights. 

Preliminary data show that MECE generated JD0.4 million operational earnings last year, sharply down from JD2.5 million in 2013.

The loss in 2014 amounted to JD4.1 million compared to JD6.6 million in the previous year. 

WASHINGTON/ATHENS — Greece needs 50 billion more euros ($55 billion) over the next three years, including 36 billion euros from European Union (EU) lenders, to stabilise its finances even under existing creditor plans, the International Monetary Fund (IMF) said Thursday.

In a new report on Greece’s financing needs, the IMF also cut the country’s economic growth prospects for this year to 0 per cent from 2.5 per cent forecast in April.

That growth estimate was made before Greece broke off talks with official creditors last weekend and ordered capital controls and its banks shut for a week.

The IMF’s new “preliminary draft” debt sustainability analysis for the country said the changes in Greek policies and its financial outlook since early 2015, roughly covering the period that the anti-austerity Syriza Party and Prime Minister Alexis Tsipras have led the country, “have resulted in a substantial increase in financing needs”.

Existing proposals by the Greek side and EU creditors do not address those needs.

“Greece faces a significantly larger financing need going forward than we thought last year,” a senior IMF official told journalists.

The new analysis suggests that “a more comprehensive debt operation will be required to ensure that debt will remain sustainable,” the official said.

On top of the need for more cash, the IMF indicated that creditors need to double the maturity of existing official loans to Greece to 40 years from 20 years.

“This is a dramatic move,” the official added.

Separately, Greece’s dive into financial uncertainty is forcing struggling businesses to take unusual steps to survive, including hoarding euros in cash.

The government’s announcement it was closing banks this week to stem a panicked rush to withdraw money, left many ordinary Greeks high and dry.

“I put aside as much cash as possible” in advance, said an Athens baker Taso Paraskevopoulos, who had expected the controls to be imposed as the country staggered towards a default on a debt repayment to the IMF.

“I sometimes need hundreds of euros a day to pay suppliers and expenses, I cannot allow myself to be caught short,” he added, making it quite clear he blames the radical left ruling party Syriza for the crisis.

Five months of fruitless negotiations between Greece and its EU-IMF creditors ended with the government enforcing strict credit controls to prevent an already weak banking system from hemorrhaging.

In theory, the controls will be lifted following Sunday’s referendum on whether or not Greece should accept the creditors’ conditions in the latest bailout offer, though many here believe the fallout will go further and deeper.

Air Liquide, a gas supply company that employs 130 people, told AFP it paid its employees in advance this month to make sure they could access their money.

“We are lucky we produce locally, sell locally, and work with local people. We’ve told our few foreign suppliers about the government’s decision, asking them to be patient,” a spokesman said.

The capital controls forbid money transfers abroad, except by express permission from the finance ministry.

Businesses which import their raw materials have been the hardest hit, says Vassilis Korkidis, the head of the National Confederation of Hellenic Commerce (ESEE).

Established marble company Moschous, which boasts clients around the world, thought ahead “by ordering machines in advance”, boss Constantin Baxevanakis said.

He is more worried, however, about the future.  Baxevanakis believes the measures “are going to last”.

Cash hunting a national sport 

Stathis Potamitis, the head of a law office which employs around 100 people, agrees. 

“it’s easy to close banks, more difficult to re-open them... A big client called me on Tuesday to say he would pay in 120 days,” he said.

As unease spreads, getting one’s hands on cash has become a sort of national sport, with businesses from restaurants to car mechanics telling customers paying by card is no longer an option.

And what if the crisis drags on? asked Sotiris Papantonopoulos, the head of online insurance broker Insurancemarket, which employs 70 people.

Launched in 2011 despite the financial crisis, the company was in expansion and had intended to take on other 60 people in the coming months, “but now everything is on hold”, said Papantonopoulos, visibly upset after having to ask some of his employees not to come to work this week.

“If the measures remain in place for two months, we’ll close, it’s over. Our turnover has already dropped 70 per cent over the past few days” as clients who were supposed to renew contracts this week failed to do so.

Withdrawals from ATMs are limited to 60 euros ($66) a day, which has severely complicated economic activity in a country where electronic money transactions are far rarer than cash transactions.

Thomas Douzis, 28, the head of the high-end grocers “Ergon”, said it had caused a real headache for many.

“Our supply chain relies on 300 or so small producers from across the country who are not always equipped to take card payments, and in any case want cash,” he added.

Douzis, who has six shops in Greece, was supposed to open a third shop abroad at the end of August, this time in Miami, but may be forced to put that project on hold for the unforeseeable future. 

AMMAN — Capital Bank of Jordan was authorised last week by the Jordan Securities Commission (JSC) to raise its capital from JD181.5 million to JD200 million.

The JD18.5 million capital increase will be carried out through capitalising the amount from the JD44.16 million of retained earnings  and distributing bonus shares at a rate of 10.19 to shareholders registered in the company’s records at the end of July 7, 2015, which is 15th day from the date of the JSC approval, as required.

Chairman Bassem Khalil Al Salem told the shareholders that the board of directors decided to propose the distribution of cash dividends at a rate of 10 per cent and bonus shares at a rate of 8,8 per cent, but the Central Bank of Jordan (CBJ) found it more appropriate that the cash dole out be at a rate of 6 per cent leaving the rate on bonus shares to Capital Bank’s discretion.

Consequently, he said, the board opted to distribute bonus shares so that the bank’s capital would become JD200 million and to distribute JD10.9 million in cash dividends at a rate of 6 per cent as approved by the CBJ.

Asked about the reason behind the CBJ’s request for the change, Salem replied that the central bank was reserved because of the security situation in Iraq and the bank’s large investment there, as it owned 62 per cent of the National Bank of Iraq (NBI).

The stake was 80 per cent until the Central Bank of Iraq asked all commercial banks to raise their capital to 250 billion Iraqi dinars. 

It was for this reason, the chairman elaborated, that Capital Bank sold part of its shares to Cairo Amman Bank (about 10 per cent), Palestine Telecommunications Company (5 per cent) and Fursan Investment Fund (3.5 per cent).  

“It was the [central bank’s] view that we do not broaden our dividend distribution, but rather concentrate on building up a strong capital base and maintain a 14 per cent capital adequacy ratio for Jordan branches as  a kind of safeguard,” the chairman indicated.

He mentioned several past and present challenges in the Iraqi market such as liquidity shortage due the security situation, government decisions and the halt to opening letters of credit, but he still stressed that the country remained promising with big opportunities, especially in the south of the country where the volume of different investments is very large and where many companies from various countries are operating.  

Noting that Capital Bank was the only Jordanian bank that owns a local bank in Iraq, Salem pointed to companies operating in the oil and gas sector in south Iraq as examples of such opportunities.

He also pointed to the relationship that was established with Citibank  through NBI, noting that when the transfer business started with it two years ago, the amount was $3 million but last month exceeded $50 million.

The chairman noted that Capital Bank, whose workforce comprises 557 employees,  was taking all the necessary precautions to protect its interests and keep risks to a minimum, indicating that it focuses mainly on transfers, letters of credit, and letters of guarantee, and on working with major corporations, and international banks, such as Citibank.

The bank also supervises a number of investment projects, he remarked.

“Iraq is going through a transitory period that will pass away, and this investment will bring forth its aspired yield,” the chairman said.

Salem added that Capital Bank will continue to build a base in Iraq through NBI and its branches in Basra, Um Qasr, Najaf, Karbala, Baghdad, Al Mansour, Erbil and Al Suleiymaniyeh, and through focusing on building a solid base of clientele.

He responded to shareholders’ questions indicating that Dunes Club was expropriated as a result of around JD5 million lawsuit and that the home of Hussein Kubbah, a former chairman of Capital Bank who was ousted for misconduct after six months in the position, was also expropriated.

The chairman said that Kubbah’s indebtedness at a certain stage about JD35 million, JD11 million of which was not covered with guarantees.

Noting that the bank was able to place a lien on a factory owned by Kubbah, Salem expected this issue to be settled before the end of this year.

According to the notes attached to the bank’s financial statements as of December 31, 2014, the balance of assets under the bank’s possession in settlement of overdue loans amounted to JD64.5 million. Other impounded real estate was valued at JD16.1 million.

In the 2014 annual report, Salem wrote in a  foreword that the rate of non-performing loans to the total portfolio of credit facilities dropped to 5.8 per cent from 6.7 per cent at the end of 2013.

However, at the end of the first quarter of this year, the rate rises again to 6.1 per cent, or JD54.7 million after deducting suspended interest.

The balance sheet at the end of March 2015 shows non-performing loans at JD81.4 million, 8.7 per cent of total direct credit facilities, before deducting suspended interest.

Net credit facilities amounted to JD870.2 million on March 31, 2015 compared to JD794.4 million at the end of March 2014.

A breakdown of the lending, before deducting suspended interest and an  impairment provision related to direct credit facilities,  indicated that JD110.9 were credits to government and public sector, JD525.4 million to corporations, JD116.8 million to individuals (retail), JD55.2 million to small- and medium-sized enterprises, and JD128.8 million were classified as real estate loans.

By type of credit, real estate and construction accounted for JD210.9 million, trade JD125 million and industry JD116 million. 

Total liabilities at the end of this year’s first quarter stood at JD1.7 billion, JD1.2 billion of which were customer deposits.

Time deposits totaled JD760.9 million, savings JD60.5 million, JD374 million current accounts, and JD52.1 million were certificates of deposit.

Non-interest bearing deposits amounted to JD284.9 million or 22.8 per cent of the total, down from JD403 million or 32.7 per cent at the end of 2014.

The deposits of the Jordanian government and public sector came at JD84.4 million or 6.8 per cent of total deposits.

The chairman indicated in the foreword that last year’s net profit before tax reached JD50.1 million, compared to JD48.7 million in 2013.

Net profit after tax came at JD36.3 million, down from JD37 million.

During the general assembly meeting, attended by eight board members out of 11 and 111 shareholders out of 2,218, Omar Akram Emran Al Bitar and Reem Haitham Jamil Qussous joined the board of directors after the number was expanded to 13 members. 

AMMAN —  After heated discussions lasting about seven hours, Amwal Invest's general assembly of shareholders ratified three settlements and reconciliation agreements with several adversaries. 

Chairman Qasem Newashi last week told the Jordan Securities Commission in a disclosure that shareholders in possession of  13,569,492 million shares voted in favour and others holding 7,678,694 shares voted against.

The ordinary general assembly meeting on June 6, 2015 was attended by six out of the seven board members and 87 shareholders, out of 7,954, who carried 22.5 million shares representing 49.9 per cent of the JD45 million capital. 

Because the meeting was the second, after a previous one was postponed due to lack of quorum, it was considered legal with those present and  the decisions binding to all shareholders after the company followed the necessary procedures required to hold the meetings in both times.

"The general assembly decided in a majority vote to approve all the articles of the settlement agreements as tabled and formulated between the board of directors and the parties mentioned hereunder…"  according to the minutes of the meeting.

The disclosure listed the following  three settlements and reconciliation agreements that were ratified by the shareholders.

First: The case, labeled Al Ahlia Company Shares Agreement, under number 56/2012 at the Anti-Corruption Commission, between the company on the one hand and, on the other, Fayez Faouri, Mutassem Fayez Faouri, Muntasser Fayez Faouri, Muayyad Fayez Faouri, and the Faouri Group Company.      

Second: The case, labelled Amwal Invest Company Agreement, under number 1479/2012 at the Amman Criminal Court, between the company on the one hand and, on the other, Fayez Faouri, Mutassem Fayez Faouri, Muntasser Fayez Faouri, Muayyad Fayez Faouri, and the Faouri Group Company.

Third: The case, under number 1479/2012 at the Amman Criminal Court, between the company on the one hand and, on the other, Ousama Mohammed Khatir, Tareq Mohammed Khatir, Modern International Company for Shares, Bonds and Securities, Nabil Samir Makahleh and  Zakaria Mohammed Musleh. 

Under the first settlement and reconciliation agreement, Jordan Invest  and its 19 subsidiaries agreed to relinquish around 9 million shares, or 23 per cent of the equity, they possess in the Ahlia Projects Company to the other party which is interested in turning Ahlia and into a limited liability entity owned by it (Faouri (s)).

In exchange, the Faouri(s) undertook to settle Jordan Invest's debts and other obligations to financial brokerages, initially estimated at around JD11.6 million, and any extra amount that may arise.

An appendix lists the 15 brokerage companies, engaged in share and bond trading at the Amman Stock Exchange, and gives a breakdown of the  JD12.9 million owed by Jordan Invest and its subsidiaries to each of these entities.

A number of brokerages have a lien on all 9 million shares of Ahlia Projects, a company that owns the Ahlia Plaza superstore.  

Responding to a shareholder's question, the chairman revealed that the amount lost as a result of speculation on the share of Ahlia Projects was about JD18.5 million based on a report by a committee of experts.

This settlement also covers a reconciliation between Awtad for Diversified Investments, a subsidiary of Amwal Invest, and the Faouri(s).   

Under the second settlement and reconciliation agreement, Fayez Faouri agreed to repay the obligations and indebtedness of Amwal Invest towards the Housing Bank, Union Bank and Jordan Commercial Bank. The amount is initially estimated at JD12.2 million.

He is also to pay Amwal Invest JD7.75 million.

In lieu of closing all obligations and dues of Mutassem Fayez Faouri towards Amwal Invest and its subsidiaries, and cancelling all cheques issued  by Mutassem in favour of these entities, the Faouri(s) agreed to give up any rights, claims or entitlements they hold in Amwal Invest.

Moreover, Fayez Faouri agreed to pay JD1.8 million to Sura for Development and Investment Company in order to cancel a deal related to shares of Awtad for Diversified Investments and involving Amwal Invest.

Under the third settlement and reconciliation agreement, Ousama Mohammed Khatir agreed to pay  JD5.7 million to Jordan Ahli Bank to settle dues and obligations demanded from Amwal Invest. He also agreed to pay JD200,000 to Amwal Invest to cover various costs and expenses.

The three accords entail dropping all lawsuits and prosecutions, and settling all legal disputes in order to allow the implementation of the deals.

Newashi answered several questions during the general assembly meeting telling the shareholders that the overall losses of Amwal Invest would be between JD60-61 million after the proposed modifications mentioned in the report of experts. 

The chairman estimated the damage that befell Amwal Invest from the Faouri(s) and Khatir as well as others at approximately JD54 million based on the criminal lawsuit now in court, and around JD60 million based on the civil lawsuit.

Khader Hneiti, a member of the board and representative of the Social Security Investment Fund, said the violations resulted in JD62 million of losses, JD52 million of which were caused by Faouri who provided JD28 million of guarantees to the court.

Hneiti added that based on the terms of the settlement, "Faouri will pay us about JD22 million, of which JD15 million to banks and JD7 million real estate”.

Noting that the Social Security Corporation wrote three times to the Companies Comptroller asking him not to liquidate the company, he indicated that the settlements were reached with the concerned parties after several months of negotiations and may or may not achieve the interests of the company.

Amid various arguments debating the advantages and disadvantages of the settlements, the chairman said that the board did not save any effort to collect as much as possible and has no capability to enter new negotiations.

The chairman and other members of the board were accused by some shareholders of destroying the company with settlements they considered weak.

Many shareholders lamented the loss of valuable real estate properties in Abdoun and Byader Wadi Al Seer to banks which put them to public auction.    

"Honestly, are you satisfied with these settlements?" a shareholder asked the chairman.

Newashi replied: "Personally, as shareholder Qassem Newashi, and not as board chairman, I am not satisfied. I wanted and still want a better deal but we could not achieve better than this."

The following are subsidiaries of Amwal Invest:

Hazmieh for Diversified Investment 

Raiat AlWatan for Administrative Investments 

Alezddhar for Diversified Investment 

Awtad for Diversified Investments

Rmowoz Alnanjah for Real Estate Investments 

House money for Investment 

Almyina for Diversified Investment 

Third Sura for development of hotels 

Kunoz Albhaar for investment 

Amwal Brokerage and financial services 

Almarom for Trade and Investment Company 

Jordanian Finance House 

Qasim Dahamshe- Investment Rababena for Trade and Investment Company 

Sworaa Real Estate Development 

Awtad for Diversified Investments PLC. 

Al Ahlia Commercial Centres