Bank al Etihad SME GLJC Conference final

About Bank al Etihad
Established in 1978 as a public shareholding company
One of the fastest growing banks in Jordan; grew at double or triple
the market rate over the last 3 years
Growth Rate (BaE vs. Total Market)
2014 (Aug)
Total Market
2014 (Aug)
Total Market
Traditionally a strong corporate bank
Strategic direction to diversify into certain segments of Retail
Launched major rebranding campaign in 2011 and completely
revamped branch environment and experience.
Strategic direction to grow in SME, today SME deposits constitute
around 4.5% of total bank deposits, SME credit facilities make around
8% of total facilities. Plan to increase SME to constitute 20-25% of
portfolio in the next 3-5 years.
SME in the Economy: Facts and Numbers
• 100,000+ SMEs in Jordan
• 97% of all companies in Jordan are SMEs
• SME contribute 50% or more of GDP
• Employ 60% of the Jordanian workforce
• Account for 70% of new jobs and 45% of exports
Despite the importance of SMEs to the economy, there is still a large
financing gap:
• Total current financing for SMEs is estimated at USD 2 billion
• SME financing gap is estimated at another USD 2-3 billion
Ecosystem /Key Enablers
Access to Finance:
• Loan Guarantee Programs
• SME Finance Facilities and Programs
Access to Information:
• Credit Bureau
• SME Financial and Nonfinancial Advisory Services
Access to Markets
Legal and Regulatory Framework
• Movable Asset Registry , Securitization Laws…
While Jordan has made significant strides within each enabler, certain
challenges remain.
Recent Focus on SME in Jordan
Government Programs and Initiatives
Central Bank of Jordan
World Bank
Loan Guarantee Programs in Jordan
Loan guarantee programs are currently offered to banks through 2 main
• Jordan Loan Guarantee Corporation (JLGC)
• Overseas Private Investment Corporation (OPIC)
Loan Guarantee Programs: Successes
• JLGC and OPIC programs were both successful in catalyzing SME
financing in Jordan
• Tangible benefit for SME clients through reduction of collateral
requirements; addressed one of largest obstacles facing SMEs
• Increased financial awareness and understanding among SMEs
through numerous training workshops
• Continuous outreach to bank staff to offer additional services and
support (e.g. staff training, marketing materials)
• Created successful linkages between banks and SME clients
through conferences and other events
• Joint client visits to provide comprehensive solutions to SMEs
(financing and guarantee)
• Better information about SME clients through JLGC and OPIC
Loan Guarantee Programs: Challenges
• Maximum guaranteed amount per client through all banks is low (JD
100,000) – JLGC
• Increase loan guarantee amount for critical sectors to match Industry
• Loan guarantee is non-transferable between banks, restricting
freedom of choice for clients
• Operating on case by case basis
• Sharing other collateral in event of default could stop further expansion
with client – JLGC
• Concern regarding confidence in payment in event of default
• High commission rate restricts goal of reducing cost of borrowing for
SME Finance Facilities: Successes
• CBJ has provided continuous and sustained support to SMEs
through various financing programs
• MSME Finance Facility enabled banks to reach new sectors/segments
they could not previously reach
• Medium-Term Finance Facility was successful in facilitating financing for
the manufacturing, tourism, and renewable energy sectors at
preferential rates and flexible terms for SME clients
SME Finance Facilities: Challenges
• SME financing needs to be sustainable
• Concept of risk based pricing
• Currency of lending programs
• Amount of funding available to banks is small compared to market
• Certain programs offer financing facilities in foreign currency
• Medium-Term Finance Facility (through CBJ) is limited to 3 sectors
(tourism, manufacturing, and renewable energy)
Bank al Etihad and the SME Sector
• Established dedicated SME banking department
• Entered into partnership with IFC to design and implement a new SME
• Created specialized SME business centers to service all client needs
• Team
• Offers financial and non-financial solutions and services; 360-degree
approach to SME banking
• One of the first banks to join the OPIC loan guarantee program
• BaE has the largest portfolio of OPIC-guaranteed loans
• Recently updated partnership with JLGC through new agreement
targeting SMEs
• Fully utilized allocated portion of MSME Finance Facility (World
• In discussions to enter new partnership with EBRD
Bank al Etihad SME Awards
• Bank al Etihad recently launched its first annual SME Awards to
recognize and reward SMEs and entrepreneurs
• 3 Award categories:
 Best SME (JD 25,000)
 Business Woman of the Year (JD 25,000)
 Best Startup (JD 10,000)
• 4 main evaluation criteria:
 Financial Strength/ Sustainability /Creativity /Social Impact
• Winners announced in awards ceremony on 18/11/2014
The Awards Ceremony
12 Finalists (4 in each category)
Why is BaE targeting Women?
25% of businesses in Jordan are women-owned
Only 5% of women-owned businesses are well-served by banks
Financing gap of for women-owned business
While unemployment rates are higher among women, more than
55% of all unemployed women are educated
Enhancing women’s participation in the national economy directly
impacts Jordan’s economic growth
45% of Bank al Etihad team are women
Women representation in top management
Band values and culture
Equal rights and benefits
Member of GBA
How does BaE support Women?
BaE recently announced the launch of its Shorouq Program:
• Comprehensive banking solutions and non-financial services
specifically designed for women across Jordan
• Targets women in various segments: employees/professionals,
business owners (SMEs), entrepreneurs, and in financial planning
• Seeks to support women in gaining access to funding, knowledge and
• Online portal launched as an advisory/networking tool for women
• BaE is a member of the Global Banking Alliance for Women (GBA)
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