Business | Banking
Global financial crisis no damper on opportunities for banks in Syria
The queues at Syrian banks used to be so bad that customers would slip a bank employee a few pounds to jump the line.
- By Andrew England, Financial Times
- Published: 23:21 November 14, 2008
The queues at Syrian banks used to be so bad that customers would slip a bank employee a few pounds to jump the line. Automated teller machines (ATMs) were an alien concept and Syrians could only dream of borrowing to buy a house.
An inefficient state had controlled all the banks and many of the major industries since nationalisation after the Ba'ath party seized power in 1963.
In the past four years, however, Syrians have gradually been able to get their hands on credit cards and apply for loans, not just for a home, but a new car or computer. Syria now boasts nine private banks, including two Sharia-compliant entities, with others expected to follow.
While the global financial system is in turmoil, bankers in Syria see great potential for their own banking industry, one of the Middle East's remaining virgin markets.
The fledgling state of the sector and the lack of international exposure to - or interest in - a country that is under US sanctions and still largely isolated econ-omically means it has been relatively insulated from the global crisis.
Impact
However, the general malaise could impact on the arrival of any new entrants to Syria, as regional banks face their own liquidity crunch and become more risk-adverse.
Abdullah Dardari, the deputy prime minister for economic affairs and the major figure behind the tentative opening up of Syria's economy, says that the next stage will involve restructuring some of the six state banks.
"Some of them have good capital and good assets and good branches and networking," he says. "Some of them have financial difficulties ... so we are looking at all these options."
Private bankers, meanwhile, talk up the potential of the sector in a country with a population of 20 million, where many people are walking into banks for the first time.
Since the first private bank became operational in 2004, the sector has quickly gained market share, accounting for more than 20 per cent of deposits, and some 50 per cent of foreign currency deposits, according to the World Bank.
Bankers say much more needs to be done. At present, the maximum foreign ownership in a bank is 49 per cent; foreign exchange regulations have not been fully liberalised and private banks are currently prevented from doing business with state entities or state employees, cutting out more than 50 per cent of the workforce.
Another complaint is that the private banks have no effective means to deploy their deposits apart from the central bank.
"This is the only country I've heard of where the private banks drive depositors away because there's no place to deploy your liquidity," says a banker.
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