A keen observer of financial markets, Shoman quickly understood what motivated major tycoons, who invested large sums of money in a variety of enterprises. Image Credit: Illustration: Ramachandra Babu/Gulf News

"When I decided to establish this bank, I did not wish to give it my name, or that of my village Bayt Haninah, or my country, Palestine. … But I gave it the name of my nation and my greater homeland; I called it the Arab Bank."

This was the vision that moved Abdul Hamid Shoman (1890-1974), who invented a unique financial institution from scratch, at a time when Arab nationalists were caught in revolutionary fervour. Above all else, Shoman (sometimes spelt Shouman or even Shuman) understood that while sloganeering mobilised public opinion, a nation required a solid and tested financial skeleton to allow for gradual investments.

From Palestine to America

From his modest Palestinian village of Bayt Haninah, just a few miles north of Jerusalem, Shoman embarked on the journey of a lifetime, setting foot in New York City in 1911, where he succeeded in a variety of businesses.

A keen observer of financial markets, the young man quickly understood what motivated major tycoons, who invested large sums of money in a variety of enterprises.

These observations solidified his comprehension, especially in terms of what emerging nations required, and it was in the New World that Shoman first contemplated the creation of a bank similar to those he observed and dealt with in America.

Separated from his family, Shoman became a father in 1912 but did not see his son until Majid was 14 years old, probably around 1926.

Tragedy struck the family in 1913, as Shoman's wife passed away, when Majid was one year old. Notwithstanding his desire to have his offspring join him in New York, he left the young child in the paternal grandmother's care, which allowed the boy to receive a solid education in his homeland.

Once Majid completed primary schooling at Bayt Haninah, followed by a few years at the Al Rawdah School in Jerusalem, the young teenager travelled to New York, where he enrolled in a secondary school.

A gifted student, Majid earned a bachelor's degree and a masters in economics and banking from New York University in 1931.

At the height of the Great Depression in 1929, Shoman returned home to Palestine, from where he travelled to Egypt to meet Talat Pasha Harb, then the chairman of the board of directors of the Bank of Egypt (1930).

Shoman proposed the idea of establishing a joint Egyptian-Palestinian bank, with a capital of 100,000 Palestinian pounds, the prevailing currency of the British Mandate in Palestine between 1927 and 1948 that was, naturally, pegged to the strong sterling.

When Harb placed the project on hold, a determined Shoman solicited partners to move forward and, with seven investors, assembled a capital of 15,000 Palestinian pounds to inaugurate the Arab Bank on May 21, 1930, in Jerusalem. While actual operations did not start until July 14, 1930, Shoman was eager to grow fast.

Turmoil in Palestine

For nearly a decade, the Shomans spared no pains to safeguard the bank and secure their clients' interests, although the looming British withdrawal from Palestine in 1948 created existential difficulties.

At the height of the 1948 nakba, the Arab Bank lost its branches in Jaffa and Haifa after its customers withdrew significant deposits.

In what became an epochal show of trust, Shoman satisfied every request, as no client lost a single pound. Shoman earned a reputation for integrity, and when the lost branches were relocated, the Haifa branch in Beirut, Lebanon, and the Jaffa branch in Nablus and later Ramallah, both in the West Bank, Shoman was heralded as a hero.

At the height of the war, when the branch in Occupied Jerusalem was caught up in serious disturbances, the bank's activities were moved to offices within the old city of Occupied Jerusalem.

Still, at the end of the war, Shoman had no choice but to transfer his headquarters to Amman, Jordan, where it has been ever since.

Strengthening Arab economies

With an unfulfilled vision in Palestine, Shoman devoted the 1950s to a dramatic expansion throughout the Arab world, when at least 40 new branches were established.

Shoman encouraged every person he ever met to open an account with him, regardless of size or potential, all to expand his capital base. In fact, this effort was very successful and went beyond Palestinians in exile, as Arab capital poured in. By the late 1950s, bank holdings topped 5.5 million Jordanian dinars, which was quite a substantial sum.

In what was a stroke of utter genius, Shoman invested in a wide range of new industries and public projects extending from Casablanca to Baghdad, which solidified his reputation as a believer in the future of the Arab nation.

Rather than take undue risks, Shoman devoted large sums to worthy but entirely necessary causes to improve Arab economies that, in turn, helped employ a growing cadre of educated young men and women.

Roads, power plants and a variety of infrastructure projects received Arab Bank capital. It was estimated that "Arab Bank loans created jobs for more than 100,000 employees" in the 1950s and early 1960s alone, investing in all kinds of businesses — ranging from cement and textile factories to food processing plants.

As the financial institution improved its revenues, Shoman allocated millions of his own and "the bank's money to educate hundreds of Arab students by sending them to universities", in leading Western countries.

Nationalisation and expansion

In what was the epitome of ironies, however, Shoman's epochal investments were caught in the whirlwind of nationalisations that swept key Arab countries such as Egypt, Syria, Iraq, Yemen and Algeria.

The Arab Bank suffered the indignity of nationalisation of its branches in Egypt and Syria in 1961, Iraq in 1964, Yemen in 1969, and finally in Sudan and Libya in 1970. Throughout the 1960s, at least 25 branches were closed, to which were added those shut down in the West Bank and the Gaza Strip after the 1967 Israeli occupation.

Undaunted, Shoman carried his expansion, with brand new locations in Switzerland in 1962, most of the Arab Gulf states through the early 1970s, key European centres (Frankfurt and London) and Singapore, Australia, and New York by the early 1980s.

When the Palestinian Authority and Israel signed the Oslo Peace accord in 1993, Arab Bank returned to the Occupied Territories with a network of several branches.

Remarkably, Shoman managed to weather very difficult conditions but, as a unique testament to its founder's legacy, "never defaulted on a single payment to any of its customers or partners, [as it honoured] all of its commitments regardless of the political and economical environment" that confronted the financial institution.

Abdul Hamid Shoman Foundation

To honour the memory of the founder, Abdul Majid established the Abdul Hamid Shoman Foundation in 2000, which coincidentally celebrated the bank's 70th anniversary that year. Conceived a few years earlier, the purpose of the institution was to foster innovation.

As the visionary entrepreneur believed in Arab progress, it was envisaged that his foundation would support the national economy of Jordan and Palestine and several other Arab countries by encouraging scientific research among emerging talents.

True to the founder's vision, the foundation also focused on the study of humanities as the engine that moved social consciousness. Indeed, there was and is a strong conviction among board members that the way to uplift "Arab society, depends on simultaneously building a scientific base and focusing on cultural enlightenment".

To accomplish these stated goals, the foundation provided financial assistance to a new generation of scientists and scholars in Jordan and several Arab countries, engaged in advanced research. Awardees were listed on the foundation's webpage, along with the names of selecting committee members, which added to the credibility of the process.

In fact, the foundation enjoyed a place of prominence on the Arab scientific and cultural scene, especially because of its readiness to provide those individuals who sorely lacked access to first-rate data.

As a unique corollary to its activities, the foundation established an advanced library in Amman that relied on information technology to assist scientists lacking such access. Consequently, the foundation's library became one of Jordan's premier research libraries, focusing on top scientific outputs from around the world.

There was also the Abdul Hamid Shoman Cultural Forum, also in Amman, Jordan, which was visited annually "by citizens of various leanings and social groupings". This cultural forum provided a "free platform that hosts the most pronounced of Arab intellectuals, scientists, educators and innovators, and its activities constantly attract Jordanian and Arab intellectual forces".

A strong series of publications provided various scientific products to global consumers. Among its most recent fare were Tahadiyat Al Amn Al Ghaza'i Al Arabi (Challenges of Arab Food Security) and Masha'il Arabiyyah ala Durub Al Tanaur (Arab Torches alongside Enlightenment Paths).

The first provided detailed studies of food shortages, high prices and the world food crisis, while the second examined the writings of such luminaries as Edward Said, Hesham Sharabi and Mahmoud Darwish, based on "dialogues between writers and intellectuals sharing the ties of nationalism, open-mindedness and enlightenment".

Published in both Arabic and English, these documents enhanced the intellectual debate on key subjects that concerned the Arab nation, and that will probably preoccupy it in the years ahead.

The legacy of a wizard

Abdul Hamid Shoman earned the trust of many and commitment of most as he created a premier financial institution that spread its wings throughout the Arab world. Pursuing a conservative philosophy, he committed himself and his staff to fostering stable returns, which placed customer interests above all other concerns.

Now in the hands of a third generation, the bank was active in all five continents, with over 500 branches. Its capital base stood at more than $5.5 billion, while total assets topped the $50-billion mark, with a pretax income of over $1 billion in 2008. Not too shabby for a stonemason apprentice from Bayt Haninah.

A diehard nationalist

Abdul Hamid Shoman was born in 1890 in Bayt Haninah, Palestine, and grew up at a time of great turmoil in the Holy Land. A stonemason at the tender age of 7, Shoman grew up at various construction sites, working in what were economically challenging conditions. He became aware of dramatic political shifts under British occupation and decided to seek economic prosperity overseas.

Towards that end, he emigrated to the New World in pursuit of fresh ambitions at the age of 20, and landed in New York in 1911 where he settled into a productive routine. He first became a door-to-door salesman, selling dry-good products in New York and Baltimore but, within a short period of time, purchased a highly profitable textile factory for ready-to-wear clothes, which carried his name.

It was in the financial capital of the world that the young man first contemplated starting a bank with joint Arab participation. His goal was to create a bank that would commit to developing Arab economies, perhaps even act as the nucleus of unified Arab efforts in the inter-war period, when nationalist fervour was gradually hinting of putative independences.

By 1929, as a major financial depression gripped industrialised economies, Shoman met with the chairman of the board of the Bank of Egypt in Cairo, Talat Pasha Harb, to whom he proposed the establishment of a joint Egyptian Palestinian bank. In the event, this was not to be, but a year later, Shoman created the Arab Bank, which became a landmark institution.

A diehard nationalist, the energetic Shoman actually believed in Arab unity, like the one then contemplated between Egypt and Syria. Over time, however, he became disillusioned with false aspirations. Still, his dedication to the Arab Bank was so overwhelming that most Arab governments perceived his financial participation as a vital ingredient in their respective plans.

With independence, Arab governments embarked on groundbreaking efforts that created financial institutions, which benefited from the Arab Bank's global presence.

Shoman's eldest son, Abdul Majid, assumed the leadership position as the founder advanced in age, and established the Abdul Hamid Shoman Foundation in 1978 to honour his father's vision and nationalistic impulse. The founder believed that the entire Arab nation ought to mobilise to record progress. Shoman died in 1974 and his body was laid to rest at the Al Aqsah Mosque in Occupied Jerusalem.

Dr Joseph A. Kéchichian is an author, most recently of Faysal: Saudi Arabia's King for All Seasons, Gainesville, Florida: University Press of Florida, 2008. Published on the second Friday of each month, this article is part of a series on Arab leaders who greatly influenced political affairs in the Middle East.