DAMASCUS, 9 April 2006 — Gulf investors have been awarded licenses to open three banks in Syria, raising the stakes in a sector that opened to private capital two years ago after decades of state control, officials and bankers said on Friday. The main shareholders in the three banks, which will operate according to Islamic principles, include the Saudi Dallah Al-Baraka group, the Qatar National Bank and the Commercial Bank of Kuwait.
Under a Syrian law passed last year, Islamic banks need a minimum capital of 5 billion Syrian pounds ($95 million) and foreign ownership is restricted to a 49 percent stake. The three newly-licensed banks plan to offer the remaining 51 percent to Syrian shareholders. Syrian officials said they hoped the banks would begin operations as soon as possible. Lebanese and Jordanian banks, such as Arab Bank, have started operations in Syria, where private bank deposits already amount to an estimated $3 billion.
Walid Abdel Nour, who heads Lebanon’s Byblos Bank operations, said Syrian deposits could approach Lebanon’s level of $57 billion in a few years if political uncertainty eases and Syrian expatriates send more capital home. “It is premature to say if Islamic banking could pose a threat to conventional banking in Syria. There is room for everyone at this stage,” Nour told Reuters.
Syrian banks were nationalized, along with the rest of the economy, after the Baath Party took power in 1963. Lebanon has since acted as the banking hub for Syria.
Bassel Hamawi, head of Lebanon’s Banque Audi in Syria, said a lack of banking products as well as low ratios of private deposits and private sector debt to gross domestic product meant international banks could be very profitable. “This is a highly under-served market. It is too early to even think about the competition,” Hamawi said.
Foreign banks have forged ahead with their business plans, although the United States has been putting pressure on the country’s financial system.
Washington last month finalized instructions preventing US banks from having ties with the state-owned Commercial Bank of Syria, the country’s largest.
