Syria: banks have months to plan restructure following crisis
In an attempt to revive its banking sector, Syria’s central bank has given commercial lenders six months to provision for losses from Lebanon’s financial crisis and to provide an appropriate restructuring strategy, Reuters reported on October 21st.
After 14 years of instability in Syria caused by war and Western sanctions, the Syrian officials herald this directive as a possible solution for the liquidity crisis. According to Reuters, banks are now required to recognise all of their “exposure to Lebanon’s financial system”, where Syrian lenders placed funds at the time of the Syrian civil war.
Speaking on the matter, Syrian Central Bank governor, Abdelkader Husriyeh, said: “They will need to provide us with a credible restructuring plan, and now the countdown has started. They can find various ways to do this, including via their sister banks in Lebanon or by partnering with other international institutions.”
Husriyeh also pointed out that Syrian commercial banks have over 1.6 billion in exposure to Lebanon. Reuters stated (through its calculations using last year’s financial reports published by the Damascus Stock Exchange) that this is a crucial portion of the total 4.9 billion deposits in Syria’s commercial banking sector.
Bankers confess that during the turmoil of the civil war, they relied on Lebanon, whose banking system underwent its own challenges when it imploded in 2019.
Th deadline from the central bank has been perceived as challenging as expressed by some Syrian bankers. One unnamed source said: “The decision in and of itself is justified, but the time given isn’t. It’s preemptive, premature — pre-whatever you want. Political.” Banks and bankers are exploring every possible option, from seeking investors to collaborating with other financial institutions for acquisitions.
Husriyeh confirmed to Reuters that the Syrian government plans to increase the number of commercial banks by twofold in Syria by 2030, but declined to elaborate further.
Reuters, Maghrebi.org
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