Jul. 20--AMMAN -- Signs of the "second round" of the global financial crisis have started to show on the Kingdom's banking sector, according to the Central Bank of Jordan (CBJ).

However, CBJ Deputy Governor Kholoud Saqqaf stressed that the sector is capable of overcoming the crisis due to strict monitoring and supervision policies adopted by the Central Bank, which she said were already in place even before the global economic slowdown.

Experts in Jordan, meanwhile, say that the CBJ should further tighten its supervision measures on banks and be prepared to act promptly to meet any challenges posed by the coming phase of the global economic crisis warned of in a recent report by the International Monetary Fund (IMF).

"The CBJ acts slowly towards the country's economy by adopting the 'status quo' policy," economist Yusuf Mansur said, describing the banking system in Jordan as "unhealthy" because it is highly concentrated and dominated by two or three banks.

The IMF report, issued in May, said although the direct effects of the global financial crisis on the banking sector in Jordan have been limited, enhanced financial policies and supervision will remain key in the period ahead.

In addition to tighter supervision, contingency plans for dealing with troubled banks should be developed and prompt corrective action frameworks should also be established to set the rules for government intervention, the IMF report indicated.

The IMF acknowledged that the CBJ has taken some steps in that direction, including instructing banks to raise their capital. The CBJ's deputy governor said the bank even does more than required.

For example, "the minimum capital adequacy ratio worldwide is 8 per cent, but the CBJ has set the minimum ratio in Jordan at 12 per cent to protect depositors and promote the stability and efficiency of the Kingdom's financial system," Saqqaf noted.

Recently, the CBJ cited the dissolving of the board of directors of Capital Bank as an outcome of its policy to better streamline the industry. It appointed an administrative committee to manage the bank for six months under its supervision, saying the measure was precautionary and temporary to rectify the situation of the bank's administration, pointing out that corporate governance issues were behind the decision.

Mansur described the central bank's move as "good" but said the CBJ was slow in implementing its supervision measures as violations at Capital Bank had been noticed three months earlier.

Economist Ali Tabbalat told The Jordan Times on Saturday that "the CBJ is on the right track but should keep a close watch on banks' corporate loans".