Private banks get go ahead to open shop in Syria
The Syrian ministry of economy and foreign commerce issued last week a set of regulations, specifying the registration and licensing procedures for private and joint-ownership banks in the country, based on the Banks Law no.28 passed last year, reported Al-Sharq Al-Awsat.
The regulations package includes a permit application, according to which applicants must specify the name of the proposed financial establishment, the number of shares and the names of founders and commercial entities partaking in the establishment of the bank. The Syrian Central Bank is to send a notice of approval or rejection for the application within a period of three months, the new regulations stipulate.
Officials sources reveal that more than 50 foreign banks, mainly from neighboring Lebanon and Gulf Arab countries, had contacted the authorities to get information about opening up business in the banking sector in Syria. Syrian authorities have reportedly already given the go-ahead for the establishment of a joint Arab bank. In August, four Lebanese banks—the Lebanese-European bank, Fransabank, the Bank of Lebanon and Overseas and the European Bank for the Middle East—were authorized to launch activities in Syria.
The law is part of a series of economic reforms, pressed forward by President Bashar Al-Assad who assumed office in July 2000, succeeding his late father Hafiz Al-Assad. His efforts to modernize the Syrian banking system are aimed at attracting both local and foreign private investment to revive the Syrian economy. Syria’s financial sector was nationalized by the Socialist Baath Party when it came to power in 1963. It is fully state-owned and made up of the Syrian commercial bank, banks covering industry, agriculture, real estate, along with retail banking and post office savings.
President Assad’s private banking law relates to the establishment "of banks as private or joint venture companies with shareholdings." It stipulated that the banks will be open to Arab and foreign capitalization up to a maximum 49 percent in foreign currency, while at least 51 percent would be owned by Syrian private investors. The law sets a new bank’s minimal subscription capital at 1.5 billion Syrian pounds ($28.5 million).
Banks jointly-owned by the public and private sectors could also be established, provided "the public banking system and Syria's state insurance sector will hold 25 percent of the capital" of the new banks. "All the shares must be held by Syrian citizens in their own names, except those held by the public sector," the bill states.
The law grants the central bank greater powers and more flexibility to monitor and supervise operations of the new private banks, and states that "banks operating in Syria will be subject to banking secrecy." It also introduces an open market rate for some foreign currency exchanges and includes the establishment of a local stock market.
The president’s privatization decree is supported by his prime minister, Mustafa Miro, but faces strong opposition from the old guard. A group of Syrian MPs have recently criticized it as “unconstitutional”, claiming that it undermines the country’s long standing socialist economy, reported the Daily Star newspaper.
“Parliament should respect the legacy of the late (President) Hafiz Assad who showed that socialism based on equality is the only path to salvation,” Ibrahim Huri, an independent MP from Aleppo, told Parliament. However, Huri’s proposals were overruled by Parliament, which had already ratified the president’s decree. — (Mena Report)
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