Lebanese private banks in Syrian free zones, launched a year ago as a trailblazer for greater liberalization in Syria's state-controlled economy, are a failure because of administrative restrictions, a government daily reported Tuesday, June 12.
The banks have become "simply liaison offices between clients and the main branches" of the banks in Lebanon, said the director of the state-owned Commercial Bank of Syria, Mahmoud Mithqal, as quoted in the Tishrin newspaper.
Originally, the six Lebanese banks, set up since June 2000, were to cater to businesses, industry, and transport companies within five free trade zones created in Damascus, the northern cities of Adra and Aleppo and the ports of Lattakia and Tartus.
The clients were to be given a free hand to make transactions and exchange currencies, unencumbered by the complicated regulations associated with state-owned Syrian banks.
But Tishrin said the Lebanese banks' operations were impeded by a small number of clients—only 300—and administrative restrictions affecting approval for loans and deposits.
Tishrin reported that every deposit in the Lebanese banks had to be justified.
The opening of Lebanese banks in Syria marked the first major reform of Syria's financial sector since banking was nationalized by the state in 1963 when the pan-Arab Baath party first took power.
Damascus advanced its banking reforms again in April when Syrian President Bashar al-Assad signed laws authorizing banking secrecy and the creation of private banks in the country.
The private banking law allows for new banks to open as joint-stock companies funded by either private or public capital.
The heavy bureaucracy of Syria's state banks drives many to store their money outside the country, in particular in neighboring Lebanon and in Jordan and Cyprus.
Syrian banks, excluding the central bank, officially have some $12 billion in holdings, while western experts estimate that Syrians hold tens of billions of dollars outside the country. — (AFP)
© Agence France Presse
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