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Al Rafah Microfinance Bank, Arab Palestinian Investment Bank to merge in a new corporate entity, The National Bank


The Palestinian Monetary Authority and the Ministry of National Economy have issued the requisite approvals for the merger to take place.

Talal Nasereddin, Chairman of Al-Rafah Microfinance Bank, and Omar M. Masri, Chairman of Arab Palestinian Investment Bank, signed the agreement last week in Ramallah under the oversight of Dr. Jihad Al Wazir, Governor of the Palestinian Monetary Authority. The PMA exercised rigorous due diligence in the pre-merger operational and fiscal inspections of both entities, in coordination with the Capital Markets Authority and the Ministry of National Economy. The guidance of the PMA was integral to the successful conclusion of the merger agreement. The merger was to be announced at a public ceremony for the private sector and the media on 20 November; however, it was decided to postpone the ceremonial event as a show of respect for the citizens of Gaza under siege.

Under the terms of the merger agreement, the assets and liabilities of Al-Rafah Microfinance Bank and the Arab Palestinian Investment Bank are acquired by the new entity, The National Bank. Former shareholders of each bank are entitled to a one-to-one exchange of shares held in the original entities for shares in the newly created National Bank.
Earlier this year, the two banks signed a Memorandum of Understanding that would authorise the needed disclosures and legal filings to lay the groundwork for the merger. The merger was spurred by recognition of a demonstrated need for a bank that would more fully address the needs of retail and corporate customers and with sufficient reserves to operate effectively in a highly competitive, volatile local market. The newly formed National Bank will commence operations with $50 million in paid up capital. It is agreed to reach a capitalisation level of $75 million during 2013.

Talal Nasereddin, who will serve as Chairman of the new entity, said, "The decision to change the name of the bank to "The National Bank" reflects the vastly expanded set of customer-based demographics we will be serving after our merger with the Arab Palestinian Investment Bank. With more than 13,000 shareholders, including some of the largest economic institutions in Palestine such as Paltel Group, PADICO, Trust Insurance, National Insurance, Birzeit Pharmaceuticals and our new strategic investment partner, Massar International, the bank"s original name no longer fully captured our scope of operations."

Omar M. Masri, who will serve as The National Bank"s Vice Chairman, said, "Clearly, this merger reflects a deep level of commitment on the part of the Arab Palestinian Investment Bank to the need for investment and expansion in the Palestinian financial market. In spite of the continuing occupation and restrictions on movement which profoundly impact investment and trade, we are confident that this merger will add value to all shareholders. Our objective is not to create "just another bank", but to create a new, strong financial institution that will offer a diverse, well-targeted roster of services that will ultimately be a boon to business and to the local economy, while serving the needs of depositors.

Masri also commented that the depth of experience shared by the Board of Directors and majority shareholders of the new bank will give it a key competitive advantage in the local market. "The human capital of a bank is equally important to its success as its paid-up capital", said Masri. "One of our first priorities will be customer-service training that will reach and exceed the highest international standards. Second, we will immediately move to address the fundamental lack of services that still plagues this market; the Palestinian financial market is lagging behind the rest of the Arab world when it comes to adopting new technologies to improve the customer experience. In short order, it will increasingly less necessary for Palestinian businesses to seek the services of a regional or international bank - The National Bank will address all its customers" needs."

Nasereddin added, "Going forward as The National Bank, we intend to capitalize on and continue the strong performance record of Al Rafah Microfinance Bank. We were a newly reinvigorated entity even before the merger took place. As the planned expansion of our network is implemented, we expect to improve further on our already outstanding performance. Today the sixth branch of the bank will start operating at the new headquarters building, and we intend to have a branch in each major city by the end of next year."

The National Bank will introduce comprehensive banking solutions including commercial banking services and investment banking services, in addition to its historical offerings of microloan products from Al Rafah Microfinance Bank, which contributed the lion"s share of its revenues. The National Bank, as a main shareholder in first and only mortgage company (Palestine Mortgage and Housing Corporation - PMHC) will also offer refinanced mortgage loans and insurance on mortgages.

The National Bank will trade on the Palestinian Exchange (PEX) under the symbol TNB.



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