A financial institution , sometimes called a banking institution , is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial institution:
55-622: Arab Bank is a Jordanian bank that is one of the largest financial institutions in the Middle East . It is headquartered today in Amman , Jordan , and operates as a universal bank that serves clients in more than 600 branches spanning five continents. Arab Bank is a publicly held shareholding company listed on the Amman Stock Exchange . The bank is a major economic engine in Jordan and throughout
110-540: A $ 5 billion lawsuit: U.S. v. McGraw-Hill Cos et al., U.S. District Court, Central District of California, No. 13-00779. Since it did not charge Fitch and Moody's and because the Department did not give access to evidence, there has been speculation whether the lawsuit may have been in retaliation for S&P's decision to downgrade. On April 15, 2013, the Department of Justice was ordered to grant S&P access to evidence. On November 11, 2011, S&P erroneously announced
165-423: A $ 5.8 billion lawsuit against Arab Bank, claiming that the bank cooperated with, supported, assisted, funded, and encouraged terrorist actions that resulted in thousands of casualties and wounded. Financial institution Financial institutions can be distinguished broadly into two categories according to ownership structure: Some experts see a trend toward homogenisation of financial institutions, meaning
220-452: A London-based, fully owned subsidiary. It also acquired 50% of MNG Bank in Turkey (now known as Turkland Bank) and 50% of Al Nisr Al Arabi Insurance company in Jordan, thus introducing bancassurance to its product variety. Also, the group established Arab Bank-Syria. In 2008, Arab Bank partnered with Vasco, now OneSpan , to work on the bank's authentication technology. Over the next few years,
275-445: A component used by S&P in assessing an enterprise's overall creditworthiness. S&P updated its management and governance scoring methodology as part of a larger effort to include enterprise risk management analysis in its rating of debt issued by non-financial companies. "Scoring of management and governance is made on a scale of weak, fair, satisfactory or strong, depending on the mix of positive and negative management scores and
330-583: A heavily regulated environment because they are critical parts of countries' economies, due to economies' dependence on them to grow the money supply via fractional-reserve banking . Regulatory structures differ in each country, but typically involve prudential regulation as well as consumer protection and market stability. Some countries have one consolidated agency that regulates all financial institutions while others have separate agencies for different types of institutions such as banks, insurance companies and brokers. Countries that have separate agencies include
385-772: A period of ten years, Arab Bank lost a total of 25 branches. When Israel occupied the West Bank and the Gaza Strip in 1967, more branches were closed. The bank carried on its expansion. In 1961, the bank opened its first international location, becoming the first Arab financial institution to establish a presence in Switzerland. A sister institution, Arab Bank Switzerland, was established in Zurich in 1962 with another branch in Geneva opening in 1964. In 1974, after his father's death, Abd Al-Majeed Shoman
440-553: A result, some critics have contended that the credit ratings agencies are beholden to these issuers in a conflict of interests and that their ratings are not as objective as they ought to be, due to this "pay to play" model. In 2015, Standard and Poor's paid $ 1.5 billion to the U.S. Justice Department, various state governments, and the California Public Employees' Retirement System to settle lawsuits asserting its inaccurate ratings defrauded investors. In April 2009,
495-448: A scale from A-1 to D. Within the A-1 category, it can be designated with a plus sign (+). This indicates that the issuer's commitment to meet its obligation is very strong. Country risk and currency of repayment of the obligor to meet the issue obligation are factored into the credit analysis and reflected in the issue rating. S&P has had a variety of approaches to reflecting its opinion of
550-467: A subscription to access. These include Indexology, VIX Views and Housing Views. Credit rating agencies such as S&P have been cited for contributing to the financial crisis of 2007–08 . Credit ratings of AAA (the highest rating available) were given to large portions of even the riskiest pools of loans in the collateralized debt obligation (CDO) market. When the real estate bubble burst in 2007, many loans went bad due to falling housing prices and
605-516: A tendency to invest in similar areas and have similar business strategies. A consequence of this might be fewer banks serving specific target groups, and small-scale producers may be under-served. This is why a target of the United Nations Sustainable Development Goal 10 is to improve the regulation and monitoring of global financial institutions and strengthen such regulations. Standard Settlement Instructions (SSIs) are
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#1732851354630660-630: A weekly investment advisory newsletter for individuals and professional investors, published continuously since 1922. Credit Week is produced by Standard & Poor's Credit Market Services Group. It offers a comprehensive view of the global credit markets, providing credit rating news and analysis. Standard & Poor's offers numerous other editorials, investment commentaries and news updates for financial markets, companies, industries, stocks, bonds, funds, economic outlook and investor education. All publications are available to subscribers. S&P Dow Jones Indices publishes several blogs that do not require
715-580: Is considered the largest of the Big Three credit-rating agencies, which also include Moody's Ratings and Fitch Ratings . Its head office is located on 55 Water Street in Lower Manhattan , New York City . The company traces its history back to 1860, with the publication by Henry Varnum Poor of History of Railroads and Canals in the United States . This book compiled comprehensive information about
770-518: The Federal Court of Australia found that: "A reasonably competent ratings agency could not have rated the Rembrandt 2006-3 CPDO AAA in these circumstances"; and "S&P’s rating of AAA of the Rembrandt 2006-2 and 2006-3 CPDO notes was misleading and deceptive and involved the publication of information or statements false in material particulars and otherwise involved negligent misrepresentations to
825-594: The Financial Supervisory Authority of Norway , Germany with Federal Financial Supervisory Authority and Russia with Central Bank of Russia . Merits of raising funds through financial institutions are as follows: Standard %26 Poor S&P Global Ratings (previously Standard & Poor's and informally known as S&P ) is an American credit rating agency (CRA) and a division of S&P Global that publishes financial research and analysis on stocks , bonds , and commodities . S&P
880-497: The Middle East and North Africa region, providing banking services and capital, and facilitating development and trade throughout the region. According to its website in 2018, the bank was the highest-ranked by market capitalization, and represented approximately 25% of the Amman Stock Exchange. U.S. appellate courts have ruled in the bank's favor in several lawsuits filed in the 2000s alleging its involvement in facilitating
935-828: The Second Intifada under the Alien Tort Statute (ATS), ruling that corporations are not proper defendants in ATS suits. The U.S. Court of Appeals for the Second Circuit unanimously affirmed this dismissal in December 2015. In April 2017, the Supreme Court of the United States granted the plaintiffs' petition to hear the case, Jesner v. Arab Bank, PLC . Oral arguments before the Supreme Court were held in October 2017, and on 24 April 2018,
990-493: The U.S. Securities and Exchange Commission . S&P rates borrowers on a scale from AAA to D. Intermediate ratings are offered at each level between AA and CCC (such as BBB+, BBB, and BBB−). For some borrowers issuances, the company may also offer guidance (termed a "credit watch") as to whether it is likely to be upgraded (positive), downgraded (negative) or stable. Investment Grade Non-Investment Grade (also known as speculative-grade) The company rates specific issues on
1045-843: The United States , where the key governing bodies are the Federal Financial Institutions Examination Council (FFIEC), Office of the Comptroller of the Currency – National Banks, Federal Deposit Insurance Corporation (FDIC) State "non-member" banks, National Credit Union Administration (NCUA) – Credit Unions, Federal Reserve (Fed) – "member" banks, Office of Thrift Supervision – National Savings & Loan Association, State governments each often regulate and charter financial institutions. Countries that have one consolidated financial regulator include: Norway with
1100-698: The funding of terrorist organizations . Arab Bank was founded in 1930 in Jerusalem , Mandatory Palestine , as the first private sector financial institution in the Arab world. After the British Mandate Authority withdrew from Palestine in 1948, the Bank lost its branches in Jaffa and Haifa . When customers who were obliged to leave the country asked for their deposits, Arab Bank fully redeemed all claims. This decision won
1155-744: The Anti-Terrorism Act and Alien Tort Statute in 2004, all of which resulted in decisions in favor of the bank. In these cases, U.S. and non-U.S. plaintiffs alleged they or their family members were harmed by acts of terrorism that occurred in Israel or the West Bank/Gaza from 1995 to 2005. They alleged that the bank held accounts for individuals and organizations that, in turn, supported terrorist activities. Similar cases were brought against UBS , Credit Lyonnais, Bank of China, American Express Bank, National Westminster Bank and Commerzbank. On 9 February 2018,
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#17328513546301210-606: The Arab Bank a great reputation and became a historical turning point in its growth. The lost branches were re-established: Haifa branch was relocated to Beirut followed by Amman, Jaffa branch in Nablus and later Ramallah . When the branch in Jerusalem was caught up in the civil disturbance, the Bank’s activities were moved to offices within the old city of Jerusalem. In 1948, the Bank’s headquarters were transferred to Amman, Jordan, where it
1265-658: The Comptroller of the Currency and the Financial Crimes Enforcement Network assessed a $ 24 million penalty against the New York Branch of Arab Bank for failing to implement an adequate anti-money laundering program to manage the risks of money laundering and terrorist financing , and violating the suspicious activity reporting requirements of the Bank Secrecy Act . Arab Bank was also no longer allowed to process US dollar payments. On 1 October 2018,
1320-511: The Court affirmed the dismissal of all claims against the bank, finding that foreign corporations are not proper defendants in cases brought under the ATS. On 6 November 2012, a U.S. judge dismissed a civil litigation action brought by Israeli resident Mati Gill under the Anti-Terrorism Act for injuries he sustained in an alleged terrorist attack in Israel in 2008. In 2005, the U.S. Office of
1375-537: The District Court erred in failing to provide the jury with adequate instructions during the court proceedings. In 2015, the bank reached a settlement with 597 victims or the relatives of victims of 22 Hamas attacks between 2001 and 2004 in Israel. In 2013, the U.S. District Court for the Eastern District of New York dismissed Jesner v. Arab Bank, a case filed by 6,000 foreign citizens injured in Israel during
1430-543: The EC said in its statement of objections which lays the groundwork for an adverse finding against S&P. "The (numbers) are indispensable for a number of operations that financial institutions carry out – for instance, reporting to authorities or clearing and settlement – and cannot be substituted.” S&P has run the CUSIP Service Bureau , the only International Securities Identification Number (ISIN) issuer in
1485-573: The MENA region. Since 2006, the bank has held a regulatory compliance summit with speakers from across the international banking community to discuss and learn more about the compliance environment. In 2008, at the request of the Association of Banks, Arab Bank hosted a compliance workshop attended by compliance professionals from banks throughout the country including the Central Bank of Jordan. As of 2023,
1540-509: The Together Program. In March 2011, Arab Bank Chairman Abdel Hamid Shoman announced the bank would be partnering with the private sector and allocating one million Jordanian Dinars for development projects to help fight against poverty and unemployment in Jordan. Several civil lawsuits were filed against the bank in the U.S. District Court for the Eastern District of New York in Brooklyn under
1595-420: The U.S. Court of Appeals for the Second Circuit overturned a liability verdict in the case of Linde v. Arab Bank Plc in the U.S. District Court, Eastern District of New York (Brooklyn). The verdict overturned from 22 September 2014 after 30 days of trial and two days of jury deliberation, found the bank liable for knowingly supporting terrorism relating to 24 different terrorist acts. The Second Circuit found that
1650-714: The U.S. Office of the Comptroller of the Currency terminated this consent order. On 26 February 2004 the Israel Defense Forces confiscated funds from Arab Bank's and Cairo-Amman Bank's Ramallah branch in connection with an investigation into whether certain account holders were supporting terrorism. In September 2009, the IDF issued a letter to Arab Bank stating that it had no evidence that the bank or any of its directors or employees were involved in or funded terrorist activities. In 2019, over 1,132 Israeli victims of terrorism and families of Israelis murdered in terrorist attacks filed
1705-602: The US, on behalf of the American Bankers Association . In its formal statement of objections, the EC alleged "that S&P is abusing this monopoly position by enforcing the payment of licence fees for the use of US ISINs by (a) banks and other financial services providers in the EEA and (b) information service providers in the EEA." It claims that comparable agencies elsewhere in the world either do not charge fees at all, or do so on
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1760-501: The agreements between two financial institutions which fix the receiving agents of each counterparty in ordinary trades of some type. These agreements allow the related counterparties to make faster operations since the time used to settle the receiving agents is conserved. Limiting each subject to an SSI also lowers the likelihood of a fraud . SSIs are used by financial institutions to facilitate fast and accurate cross-border payments. Financial institutions in most countries operate in
1815-794: The bank made its first sustainable perpetual issuance of $ 250 million in AT1 ( Tier 1 capital securities). In 2006, the bank participated at the International Anti-Money Laundering/Combating Financing Terrorism Conference hosted by the Union of Arab Banks and supported by the United States Department of the Treasury . The conference sought to unite the public and private sector in strengthening defenses against terrorist financing and money laundering in
1870-682: The bank opened branches in Frankfurt, London, Australia, New York and Singapore. Following the Oslo Peace Accords between Israel and Palestine, at the invitation of Israel, Arab Bank opened branches in several Palestinian towns with broad governmental support. Today, Arab Bank provides consumer banking services, as well as corporate and institutional banking services to individuals, corporations, government agencies and other international financial institutions. After years of being ranked A− from Fitch, A− from Standard & Poor , and A3 from Moody's ,
1925-588: The bank's rankings were dropped twice in 2011. Moody's first downgraded its Local Currency Deposit Rating to Baa1, and then downgraded the bank's Financial Strength Rating to a C− from a C. In both instances, Moody's noted the decision was based on an analysis of political instability in the region. In April 2012, Moody's announced a possible downgrade of the bank's current Financial Strength Rating as well as its local currency long- and short-term deposit ratings. In November 2011, Standard & Poor's lowered its long-term counterparty credit ratings to 'BB' from 'BB+', noting
1980-711: The banks Board of directors were: In 1978, Arab Bank created the Abd Al-Hameed Shoman Foundation to promote social development in the Arab world in the fields of science and the humanities. It is one of the only foundations created by a private sector company in Jordan. The foundation organizes the Abd Al Hameed Shoman Cultural Forum which brings together leading scientists, educators and innovators of thoughtful discussion on today's cultural issues. In 2011, Arab Bank committed approximately 87% of its annual budget for community investment through
2035-592: The class of potential investors in Australia, which included Local Government Financial Services Pty Ltd and the councils, because by the AAA rating there was conveyed a representation that in S&;P’s opinion the capacity of the notes to meet all financial obligations was “extremely strong” and a representation that S&P had reached this opinion based on reasonable grounds and as the result of an exercise of reasonable care when neither
2090-470: The company called for "new faces" in the Irish government , which was seen as interfering in the democratic process. In a subsequent statement they said they were "misunderstood". S&P acknowledged making a US$ 2 trillion error in its justification for downgrading the credit rating of the United States in 2011, but stated that it "had no impact on the rating decision". In November 2012, Judge Jayne Jagot of
2145-444: The company was acquired by The McGraw-Hill Companies , extending McGraw-Hill into the field of financial information services. As a credit rating agency (CRA), the company issues credit ratings for the debt of public and private companies, and public borrowers such as governments, governmental agencies, and cities. It is one of several CRAs that have been designated a nationally recognized statistical rating organization (NRSRO) by
2200-562: The cut of France's triple-A rating (AAA). French leaders said that the error was inexcusable and called for even more regulation of private credit rating agencies. On January 13, 2012, S&P truly cut France's AAA rating, lowering it to AA+. This was the first time since 1975 that Europe's second-biggest economy, France, had been downgraded to AA+. The same day, S&P downgraded the rating of eight other European countries: Austria , Spain , Italy , Portugal , Malta , Slovenia , Slovakia and Cyprus . The company publishes The Outlook ,
2255-463: The error "had no impact on the rating decision" and adding: In taking a longer term horizon of 10 years, the U.S. net general government debt level with the current assumptions would be $ 20.1 trillion (85% of 2021 GDP). With the original assumptions, the debt level was projected to be $ 22.1 trillion (93% of 2021 GDP). In 2013, the Justice Department charged Standard & Poor's with fraud in
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2310-460: The existence and severity of governance deficiencies." On August 5, 2011, following enactment of the Budget Control Act of 2011 , S&P lowered the US's sovereign long-term credit rating from AAA to AA+. The press release sent with the decision said, in part: The United States Department of the Treasury , which had first called S&P's attention to its $ 2 trillion error in calculating
2365-859: The financial and operational state of U.S. railroad companies. In 1868, Henry Varnum Poor established H.V. and H.W. Poor Co. with his son, Henry William Poor , and published two annually updated hardback guidebooks, Poor's Manual of the Railroads of the United States and Poor's Directory of Railway Officials . In 1906, Luther Lee Blake founded the Standard Statistics Bureau , with the view to providing financial information on non-railroad companies. Instead of an annually published book, Standard Statistics would use 5-by-7-inch cards, allowing for more frequent updates. In 1941, Paul Talbot Babson purchased Poor's Publishing and merged it with Standard Statistics to become Standard & Poor's Corp. In 1966,
2420-538: The foundation. In 2011, the bank donated over 8 million Jordanian dinars to its Abd Al-Hameed Shoman Foundation to support scientific research and studies in the humanities in Jordan and the Middle East. In late 2009, Arab Bank launched 'Together', a corporate social responsibility program that links five non-profits dedicated to poverty alleviation, education, orphan support, health and environmental protection. In 2011, Arab Bank donated more than 177,000 Jordanian dinars to
2475-475: The inability of bad creditors to refinance. Investors who had trusted the AAA rating to mean that CDO were low-risk had purchased large amounts that later experienced staggering drops in value or could not be sold at any price . For example, institutional investors lost $ 125 million on $ 340.7 million worth of CDOs issued by Credit Suisse Group , despite being rated AAA by S&P. Companies pay S&P, Moody's, and Fitch to rate their debt issues. As
2530-764: The mid-1990s, the bank was given permission by the Central Bank of Jordan and the Israeli Central Bank to reopen in the West Bank/Gaza under the supervision of both the CBJ and the Palestinian Monetary Authority. In May 2000, Abd Al Majeed's son Abdel Hamid became CEO. Under his leadership, the Arab Bank reopened operations in Syria in 2005, and took steps to commence its activities in Iraq, circumstances permitting. In January 2007, Arab Bank established Europe Arab Bank (EAB),
2585-407: The ratings are constrained by the local currency ratings on the sovereign. As of 25 January 2012, Fitch still had Arab Bank ranked at an A−. In April 2023, Fitch rated its Viability Rating (VR) b+. As of 2018 the bank reported net income after tax of $ 820.5 million as compared to $ 533 million in 2017 with net income before tax reaching $ 1.1 billion. The Group's equity grew to reach $ 8.7 billion, while
2640-424: The relative strength of a company's corporate governance practices. Corporate governance serves as investor protection against potential governance-related losses of value, or failure to create value. S&P developed criteria and methodology for assessing corporate governance. It started issuing Corporate Governance Scores (CGS) in 2000. CGS assessed companies' corporate governance practices. They were assigned at
2695-833: The request of the company being assessed, were non-public (although companies were free to disclose them to the public and sometimes did) and were limited to public U.S. corporations. In 2005, S&P stopped issuing CGS. S&P's Governance, Accountability, Management Metrics and Analysis (GAMMA) scores were designed for equity investors in emerging markets and focused on non-financial-risk assessment, and in particular, assessment of corporate governance risk. S&P discontinued providing stand-alone governance scores in 2011, "while continuing to incorporate governance analysis in global and local scale credit ratings". In November 2012, S&P published its criteria for evaluating insurers and non-financial enterprises' management and governance credit factors. These scores are not standalone, but rather
2750-424: The return on equity increased to reach 9.5%. The Group's net operating income grew by 8% driven by growth in net interest and commission income. Credit facilities increased by 3% to reach $ 25.8 billion, while customer deposits increased to reach $ 34.3 billion. As the only Jordanian organization ranked among the top 10 organizations in the Arab world, Arab Bank has shown great progress in its ESG performance throughout
2805-519: The ten-year deficit reduction under the Budget Control Act, commented, "The magnitude of this mistake – and the haste with which S&P changed its principal rationale for action when presented with this error – raise fundamental questions about the credibility and integrity of S&P's ratings action." The following day, S&P acknowledged in writing the US$ 2 trillion error in its calculations, saying
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#17328513546302860-652: The years. During 2014, the bank was ranked at the fifth level and was able to move up to the fourth level during 2015, with a total weight of 2.78%. Arab Bank has subsidiaries in a small number of countries, including Australia ( Arab Bank Australia ) and Switzerland ( Arab Bank Switzerland ). In 2023, Arab Bank was named "Middle East Bank of the Year" by The Banker magazine, owned by the Financial Times . In 2023, it had assets of $ 68.3 billion (up 6% from 2022) and net income of $ 829.6 million (up 52% from 2022). Also under ESG ,
2915-428: Was named Chairman and General Manager of Arab Bank. Under his leadership, the bank expanded its scope of products and services into new areas of business. Though it previously emphasized trade and small-scale construction finance, the bank undertook a leading role in large-scale project finance, both directly and through participation in syndicated loans . By the 1990s, the bank added investment banking to its services. In
2970-717: Was officially incorporated as a public shareholding company. In the 1940s and 1950s, the bank grew to 43 branches in the Arab world and had JOD 5.5 million capital. During the 1960s, the bank focused on investments and became a catalyst for Arab economic developments when most other financial institutions avoided the risk. The 1960s brought along a wave of Nationalization which swept the Arab world as country after country gained independence from British and French colonial rule. Branches in Egypt and Syria were nationalized in 1961, Iraq in 1964, Aden in 1969, and finally Sudan and Libya in 1970. Within
3025-668: Was true and S&P also knew not to be true at the time made." In conclusion, Jagot found Standard & Poor's to be jointly liable along with ABN Amro and Local Government Financial Services Pty Ltd. In November 2009, ten months after launching an investigation, the European Commission (EC) formally charged S&P with abusing its position as the sole provider of international securities identification codes for United States of America securities by requiring European financial firms and data vendors to pay licensing fees for their use. "This behavior amounts to unfair pricing,"
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