VZCZCXYZ0012
RR RUEHWEB

DE RUEHAM #0347 0360616
ZNR UUUUU ZZH
R 050616Z FEB 09
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 4398
INFO RUEHEG/AMEMBASSY CAIRO 3897
RUEHJM/AMCONSUL JERUSALEM 5335
RUEHTV/AMEMBASSY TEL AVIV 1514
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS AMMAN 000347 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB AND NEA/ELA 
STATE PASS OPIC 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV OPIC JO
SUBJECT: OPIC Visit Energizes Banks Supporting Jordan's Housing and 
Mortgage Initiative 
 
Ref: A) AMMAN 137 
     B) AMMAN 136 
     C) 08 AMMAN 2316 
 
¶1.  (SBU) OPIC Vice President Robert Drumheller, in order to 
invigorate stalled negotiations, discussed proposed OPIC housing 
loans with senior government officials and participating Jordanian 
banks during a January 25-30 visit.  The $250 million in loans would 
allow three local banks to make 25-year mortgages to low-income 
Jordanians at fixed, below-market rates as part of a royal housing 
initiative (ref C).  Chief of the Royal Court Nasser Lozi reiterated 
his commitment to the housing and OPIC loan programs and promised 
the government's support in encouraging a speedy conclusion to the 
negotiations, which OPIC would like to finalize by March 6, 2009. 
 
¶2. (SBU) While the housing initiative originally planned for the 
construction of 20,000 new homes annually, Director General of the 
Housing and Urban Development Corporation Sana Mihyair estimated 
that just 400 have been completed since the program launched in 
August 2008.  She projected that only 4,500 homes would be 
constructed in 2009.  Minister of Public Works and Housing Engineer 
Sahel Majali said that demand for the housing program is high and 
ideally the housing and loan programs could provide mortgages with 
average monthly payments of $174 for civil servants with monthly 
incomes near $450.  He said the draft Landlords and Tenants Law, 
which allows for rental price increases, was just sent to parliament 
and makes the housing program even more necessary (ref A). 
 
¶3. (SBU) Central Bank of Jordan Deputy Governor Kholoud Saqqaf told 
the OPIC delegation that the protracted bank negotiations reflect 
the conservative philosophy of the banks (ref B).  Arab Bank Credit 
Manager Ahmed Al Halim summarized the banks' concerns about the OPIC 
loan by explaining that both the 25-year length and the 
international loan terms are unique in Jordan.  He explained that 
while the banks want to make the deal happen, they do not want the 
loan terms to excessively restrict the banks' abilities to operate 
during the extended period. 
 
¶4. (SBU) Saqqaf said that all Jordanian banks, including the three 
participant banks, have slowed down their lending and have become 
more selective since the start of the global credit crisis.  She was 
quick to point out that the banks remain quite liquid and their 
credit condition has not deteriorated. Saqqaf added that Arab Bank, 
the most conservative bank in Jordan and biggest of the three 
participant banks, has become even more conservative in light of the 
global financial crisis.  Samir Tamimi, Senior Vice President of 
Arab Bank's Global Credit Unit, explained that while it remains 
"business as usual" for Arab Bank's long-term customers, the bank 
has indeed become very cautious about lending to new customers due 
to the worldwide credit crunch. 
 
Housing Minister Proposes Another Approach 
------------------------------------------ 
 
¶5. (SBU) Majali proposed to OPIC, that rather than having the banks 
issue the mortgages, that his Ministry could receive the $250 
million OPIC loan and issue mortgages.  He added that because his 
ministry does not need to make the 2.5% profit that the banks are 
budgeting, the mortgages could be offered at a lower interest rate. 
OPIC advised Majali that if he wanted to create a new 
mortgage-lending entity that he should do so with International 
Finance Corporation (IFC) involvement.  OPIC said, however, that it 
intends to continue with the current bank loan negotiations.  Cairo 
Amman Bank (CAB) General Manager Kamal Al Bakri criticized the 
Minister's plan and pointed to the government's inability to collect 
student loan payments from 24,000 borrowers as indicative of its 
inability to act as a bank.  He said the government recently hired 
CAB to act as a collection agency after it cancelled the student 
loan program. 
 
¶6. (U) OPIC cleared this message. 
 
Visit Amman's Classified Web Site at 
http://www.state.gov.sgov.gov/p/nea/amman/ 
 
BEECROFT