Instructions on Monetary Fines for Banks' Investments in Shares

No. (2005/21)

Based on the provisions of Articles (38 and 88/B/4) of Banking Law No. (28) of 2000, and in accordance with the Instructions on Banks' Ownership of Shares and Provisions in Companies' Capital No. (2002/12) dated 27/3/2002, and pursuant to the decision of the Central Bank Board of Directors No. (2005/67) dated 25/7/2005, and given the termination of the profession granted to banks to correct the violation of the ratio of total bank investments in shares to capital, the following is approved:

• 1 - In the event that the total investment of the bank in shares and provisions, directly or indirectly, exceeds the maximum limit stipulated in Article (38/A/3) of Banking Law No. (28) of 2000, a monthly monetary fine of (2) per thousand of the value of the excess (calculated based on purchase cost) shall be imposed.

• 2 - In the event that the bank's investment in shares and provisions of any company, directly or indirectly, exceeds the maximum limit stipulated in Article (38/A/1) of Banking Law No. (28) of 2000, a monthly monetary fine of (5) per thousand of the value of the excess (calculated based on purchase cost) shall be imposed.

• 3 - In the event that the above violations occur at the bank, the higher fine shall be calculated, and the two fines shall not be combined.

• 4 - The provisions of these instructions are exempted [in addition to the exemptions stipulated in Article (38/B)] of Banking Law No. (28) of 2000, bank contributions to companies under liquidation (provided that the bank hedges adequately against the decline in the value of these contributions).

• 5 - Compliance with the ceiling and thus the imposition of the monetary fine is monitored based on monthly disclosures, and in the event that a violation appears due to investments of Jordanian banks' branches abroad or due to the bank's investments indirectly (i.e., through subsidiaries within the Kingdom), banks must provide the Central Bank with those investments monthly (instead of quarterly) for monitoring and imposing the fine purposes.

• 6 - For the purpose of applying the provisions of Article (88/B/4) of Banking Law No. (28) of 2000, the month is considered the unit for recording violations and recording financial fines.

• 7 - The monetary fines mentioned above are calculated on a monthly basis starting from the data of 31/8/2005.

• 8 - It is necessary for banks to continue obtaining prior approval from the Central Bank before contributing to the capital of any other bank or deposit-taking company, such that this contribution is within the ratio specified in Article (38/A/2) of Banking Law No. (28) of 2000.

• 9 - Banks must comply with the provisions of Article (39) of Banking Law No. (28) of 2000 regarding notifying the Central Bank within fifteen days from the date of acquiring ownership of shares and provisions that are not less than 5% of the capital of any company.

• 10 - These instructions take effect from their date, and any other instructions conflicting with them are repealed.

Please accept the highest respect,,,

The Governor
Dr. Ameya Touqan

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Number: 8643 / 2/2/10
Date: 25/8/2005 AH
Approval: 7/8/2005 AD

Source: (11/07/07)
P.O. Box: 37 • Amman 11118 Jordan • Phone: 4630301 • By telegraph: Commercry / Amman • Fax: 4638889, 4639730, 4613208 ---