Foreign Currency ControlThe Moroccan government has made the Moroccan Dirham (MD) convertible for an increasing number of transactions over the last few years. As of February 1993, the MD was made convertible for all current transactions and for some capital transactions, notably, capital repatriation by foreign investors. Foreign exchange is routinely available through commercial banks for such transactions upon presentation of documents. The Central Bank sets the exchange rate for the MD against a basket of currencies of its principal trading partners. The rate against the basket has been steady since a 9 percent devaluation in May 1990, with changes in the rate of individual currencies reflecting changes in cross-rates. In a further move, the Ministry of Finance recently decided that private enterprises are allowed to access international financial markets directly.
International financial transactions are subject to the control of the Moroccan Exchange Office, which retains the authority to act in a balance of payments or liquidity crisis.
The liberalization of the exchange control has removed all barriers for international trade transactions, foreign investments, income transfer, foreign technical assistance and tourism. Remittances of capital and related income to non-residence are guaranteed. No limitations are imposed on the time or amount of profit remitted. Loans, however, must be authorized by the Office of Exchange. Another important decision gives the banks the possibility to freely conduct investment operations in international capital market sites and, also, to engage in hard currency accounts or in any other amount of capital deposited by foreign entities.
BankingThe Moroccan banking system is similar to that of France, but not quite as sophisticated. It is composed of a Central Bank and about fifteen other commercial banks that provide a comprehensive range of services. Financing is available from quasi-state and from private institutions.
The banking industry is highly regulated. Central Bank regulations deal with minimum capital requirements, liquidity, solvency and legal lending limit ratios. In 1991, credit ceilings were substituted with indirect monitoring by way of changes in reserve requirements and controlled access to the Central Bank rediscount window. The legal lending limit of 7 percent of net capital funds is regarded by the profession as constraining. This situation has been mitigated by the recent five-fold increase in the legal lending limit for credit guaranteed by OECD-based banks.
The Banking Law of April, 1967 dealing with banking and credit practices was replaced by a law of July, 1993. Among other things, the new Banking Law also covers finance companies and other credit institutions and defines in detail the kinds of transactions that can be undertaken by credit institutions. The law also creates a national council of surveys and cash, as well as a committee on credit institutions.
Commercial Banking ServicesThere is no clear-cut distinction between commercial and merchant banks. By and large, all commercial banks provide commercial and saving services, with merchant banking as an accessory service. The four largest commercial banks are: Credit Populair du Maroc (or Banque Populaire), Banque Commerciale du Maroc, Banque Marocaine du Commerce Exterieur and Wafabank.
Moroccan banks offer a broad range of regular banking services, including depository services and trade and credit services. Several banks now offer electronic banking services for corporate clients and a wide array of consumer banking facilities such as credit cards, ATMs and telephone banking services. Most banks are linked to the SWIFT global payment system, enabling them to quickly execute foreign currency and convertible MD transactions to non-residents, including transactions involving the repatriation of earnings of foreign companies. Moroccan banks, however, are still not in the position of offering a complete spectrum of modern services in terms of foreign exchange, money and capital markets and corporate finance activities. In order to ameliorate this situation, the Moroccan monetary authorities are working on regulatory changes which would promote additional modernization of the industry.
Offshore BankingAn offshore bank is a legal entity or individual regardless of nationality whose headquarters are based in an offshore financial location and whose activities consist of dealing in convertible foreign currency deposits and undertaking with these same currencies any credits, exchange or financial activity. Currently, there are two offshore banks in the Tangier Free Trade Zone. Offshore banks are not obliged to repatriate any income or foreign revenues and have total exchange freedom with regard to their transactions with non-resident entities. These banks have free access to investment activities in Morocco and to capital participation operations in local corporations. They are exempt from registration fees, VAT, patent and urban tax as well as all import duties and taxes and TPA on distributed dividends.
Special Purpose BankingA number of financial institutions, mainly those that are government-controlled, have been established to serve special purposes, including providing finance to the agricultural industry, to hotels and other property and to investment considered as contributing to the economic development of Morocco. Notwithstanding the special purposes allocated to those institutions, they are increasingly involved in ordinary activities of commercial banks.
Other Financial InstitutionsThe few companies dealing with leasing are usually owned by larger institutions in the industry. Venture capital is hardly used for financing, and there are no specialized venture capital companies in Morocco. With regard to investment institutions, there are over twenty insurance companies in the country governed by special regulations.