NEW YORK (Jan. 22)
Arab banks are flourishing in the United States, according to a survey in the Boycott Report, an American Jewish Congress publication. This is borne out in a Federal Reserve Board list, “Foreign Investment in U.S. Banking Institutions” as of June 30, 1984.
At the start of 1984, there were 19 Arab banks in New York State alone, most of them in New York City. A newly-formed Arab Bankers Association of North America “is fburishing,” according to the Boycott Report. “The longest established Arab bank in the U.S. is UBAF Arab-American Bank, capitalized at $100 million.”
The UBAF, which came to New York in 1976, “works with American exporters seeking Arab markets, “according to a recent report in The New York Times. “It finances trade, arranges joint ventures, and seeks deposits from corporations and institutions. that strategy produced a profit for the bank of $4.5 million for the first nine months of 1984. “According to the Federal Reserve Board list, the UBAF has $1.227 billion in assets.
A NETWORK OF OUTLET
Two years after it was taken over by Arab investors, Financial General Bankshares, a multi-state holding company with a network of outlets in New York, Maryland, Virginia, Tennessee and the District of Columbia, “has become the largest Arabled financial institution in the U.S., with assets of almost $4 billion, “the Boycott Report stated. “Among its large stockholders are the former director of Saudi intelligence, the son of the ruler of Kuwait and other Arab private investors.”
The Bank Audi, of Lebanon, a relative newcomer that has gone after deposits from wealthy Lebanese Americans, earned a profit of $35,000 in the first seven months operation, through December, 1983. It is expected to report net earnings of more than $300,000 for 1984, the Times reported.
ARAB BANKS IN NEW YORK CITY
According to the Federal Reserve Board listing, the Saudi International Bank, a branch of the Arab consortium bank based in London, has assets of 341.2 million; Arab African International Bank, branch of the Arab consortium bank based in Cairo, has $331.4 million in assets; Arab Bank Corporation, branch of Kuwait-Egyptian bank based in Bahrain, $320.1 million; The Gulf Bank, branch of a bank owned by a Kuwait merchant family, $305.5 million, the National Commercial Bank, branch of largest Saudi Arabian commercial bank, has $299.1 million in assets; Dubai Bank, branch of bank owned by a prominent Dubai family, $132.8 million; Gulf International Bank, branch of Arab consortium bank based in Bahrain, $118.3 million; and The United Bank of Kuwait, branch of a Kuwaiti consortium bank based in London, has $60.7 million in assets.
All these banks are in New York. Their listed assets are as of June 30,1984.
Mergers and acquisitions of interest in local American banks are also flourishing, according to Boycott Report. Petra Capitol, the first Arab-owned investment bank established in the U.S. recently merged with a brokerage house. It is located in New York City.
A Saudi merchant, Abdullah Bakhsh, “recently acquired a 15 percent interest in a large regional bank in Milwaukee, owned by a holding company, Marine Corp., “the Boycott Report said, citing the Mideast Report as its source. “As part of the agreement, Mr. Bakhsh put $60 million of new capital into the bank holding company.”
Another Arab capitalist, Khalid bin Mahfouz, whose family owns half of the National Commercial Bank of Jeddah, recently acquired a 92 percent interest in a Houston bank, the Boycott report stated.
The influx of Arab banks was made possible by the International Banking Act of 1978 which suspended the reciprocity requirement to get a federal bank charter. Before that, an Arab bank could not get a federal license unless American banks were allowed to operate in the Arab country. Reciprocity remained a requirement to get a New York State charter until New York repealed it last fall.
ROLE OF POLITICS AND RELIGION
“Avoiding politics and religion is a particularly sensitive question because of the Arab-Israeli conflict,” the Times noted in its recent report. “The banks would get in trouble in their home countries if , for example, they invested in Israeli companies. But they would get in trouble with American authorities if they were believed to discriminate against Israel. The problem seems not to have arisen much because most Arab banks aim only to serve Arabs and American corporations doing business in Arab countries.”
As for hiring Jews, the Times quoted Fakhruddin Khalil, senior executive vice president of the UBAF, as saying, “The answer is a very strong and clear confirmation that anybody who applies and is qualified will be hired irrespective of religion.” He said he did not ask the religion of job applicants and did not know the religion of many employees but he assumed that he had hired Jews.