OPIC Cooperates with Arab Bank to Provide $100 Million to Expand Homeownership in Jordan
May 19, 2009
WASHINGTON, D.C. – One hundred million dollars in financing from the Overseas Private Investment Corporation (OPIC) will enable Jordan-based Arab Bank to expand homeownership for low-income families in the country, OPIC Acting President Dr. Lawrence Spinelli announced today. The project directly supports the affordable housing goals of Jordan’s National Housing Initiative, established last year by King Abdullah.
OPIC will provide $100 million for a loan facility with Arab Bank Plc. The facility will enable the bank to introduce 25-year, fixed-rate, local currency mortgages to lower-income households in Jordan, qualified pursuant to guidelines issued by the nation’s Housing and Urban Development Corporation (HUDC) according to the housing initiative.
CHF International (CHF) will serve as U.S. sponsor for the project. The sponsor will provide technical oversight for the project, working with the bank to review participating bank mortgage credit policies, origination and servicing procedures, and ongoing mortgage loan performance.
“This project will mobilize significant loan capital to finance the expansion of homeownership in Jordan, which in turn will increase the wealth-building capacity of lower income families in Jordan,” Dr. Spinelli said. “Ultimately, it will serve as a catalyst to attract future investment capital to the region by demonstrating the possibility of profitable mortgage lending to underserved markets. OPIC is pleased to support a project with so many positive developmental benefits.”
Dr. Spinelli added that the banking sector in Jordan is characterized by good asset quality, sound capitalization, high liquidity, increasing competition, and improving regulation. According to the International Monetary Fund (IMF), banks in Jordan are well capitalized, non-performing loan ratios are low, and strict loan classification and provisioning rules require banks to maintain adequate loan loss provisions.
His Majesty King Abdullah proclaimed 2008 the year of affordable housing in Jordan and led the development of the National Housing Initiative, under which potential homeowners can apply to the HUDC for approval to qualify for the program. The program goals are to construct 20,000 residences per year for the next five years with the first homes due for completion in 2009.
CHF is an international development organization incorporated in 1952 as the Cooperative Housing Foundation, a U.S.-based, not-for-profit organization. CHF’s mission is to serve as a catalyst for long-lasting, positive change in low- and moderate-income communities and has worked in 100 countries worldwide.
Arab Bank Group is one of the largest financial organizations in the Middle East and North Africa region. Over around 79 years of operation, it has set a foothold in financial centres all over the globe, offering its services and products though around 500 branches in more than 30 countries across five continents. Despite the economic downturn globally, the group's 2008 financial statements show it achieved a quality leap in profits, hitting the $1 billion mark to reach $1.061 billion, compared with $964 million posted at the end of 2007, with $97 million increase and a growth rate of ten percent. The group's results also indicate there was a rise in assets at the end of March 2009 to $46.4 billion, compared with $40.5 at the end of March 2008, with a 15 percent growth. Shareholders equity, meanwhile, increased to $7.4 billion from $7.1 billion in March 2008.