This important banking development follows legislation that was passed in 2002 aimed at attracting international banks and foreign investment and moving away from the domination of thesector by the state-owned monolith, Commercial Bank of Syria.
In early January, Bank of Syria and Overseas (BSO) opened with the support of the World Bank’s private sector arm, the IFC. Capitalised at $30m, BSO is 51% owned by Syrian investors: 38% by Syrian citizens through an initial public offering and 13% by a group of prominent businessmen, led by head of Damascus’ Chamber of Commerce Dr Rateb Shallah.
BLOM Bank, from Lebanon, is the anchor investor in BSO with a 39% equity stake and managerial control. The IFC holds a 10% stake.
The other new bank, European Bank of the Middle East, has similar levels of paid-up capital and anchor investors from the region. It is a joint venture between Saudi Arabia’s Banque Saudi Fransi and Lebanon’s Banque Europeenne pour le Moyen-Orient, which hold 27% and 22% respectively.
Another majority Syrian-owned bank, with Jordan’s Housing Bank for Trade and Finance as anchor shareholder, is expected to open soon.
Two other foreign banks, Jordan’s Arab Bank and France’s Société Générale, are understood to be in the final stages of the foreign bank licensing process and are expected to help form new private banking institutions in the near future.
The government of France provided funding, through IFC’s Technical Assistance Trust Fund programme, for the evaluation of the strength and weaknesses of Syria’s financial system, including banks, insurance company, and other long-term savings institutions.
