IN 2003, FOUR decades after Syria nationalized its economy in the name of its socialist economic model, president Bashar al-Assad approved legislation allowing for the creation of privately owned banks. Until the first private bank opened its doors early in 2004, the country had just seven public-sector banks, of which only one was commercial, Commercial Bank of Syria.
The poor state of the domestic banking sector contributed towards the creation of a cash economy at home and the extensive use by Syrians of foreign banking services. "Syria is a large market with almost no commercial banking," says Amine Awad of the Banking Control Commission (BCC), Lebanon's independent banking supervisory authority. "The Commercial Bank of Syria is a very old-fashioned bank, and can't serve the needs of the Syrian economy. So, for the past 15 years, a large part of banking transactions were made outside of the country, in Jordan, Lebanon and western Europe."
This looks set to change, however, with the implementation of the private banking law. The legislation allows for the creation of 100% privately owned banks, at least 51% of the shares of which must be held by Syrian nationals.