Capital requirements for banks in Syria will at least double to strengthen a nascent financial sector attracting Gulf investment despite the global crisis, said the central bank governor.
"The new regulations will come into force as soon as possible. We are encouraging new banks to enter the market because Syria can absorb many more," said Adib Mayaleh in an interview.
The government relinquished its monopoly on the banking sector only six years ago and the country of 20 million people now has 13 privately-owned banks and six state-owned ones.
Mayaleh said the minimum capital requirement to set up a conventional commercial bank will rise from the present $30 million (Dh110.1m) to $80-$100m, which would bring them near the requirement for Islamic commercial banks.
"We are already seeing the banks investing as much capital voluntarily," he said, adding that profitability at privately held banks was "very high' at 10 per cent.
"The international crisis has not affected us," he said.
Mayaleh pointed to a public offering under way to raise 34 per cent of $107m in planned capital for a subsidiary of Qatar National Bank. Albaraka, a banking group based in Bahrain and controlled by Saudi billionaire Sheikh Saleh Kamel, plans to raise a similar amount in an October offering for a new Syrian branch, said Mayaleh.
"We want to encourage the Syrian public to subscribe to these public offerings and change the mentality of keeping cash under the mattress," said Mayaleh, referring to decades of a command economy that discouraged private investment.
Privately held banks were allowed in but foreign ownership in them cannot exceed 49 per cent. Mayaleh said long delayed legislation to increase the ceiling had not been scrapped.
"We are dealing with the issue," he said.
Mayaleh said improved relations between Syria and the United States since President Barack Obama took office in January could encourage European banks to enter the Syrian market.
"Major European banking groups have approached us for setting up in Syria," he said.
The sanctions do not ban US investments in Syria outright. Specific regulations have targeted the Commercial Bank of Syria, the country's largest, which Washington accuses of money laundering and links to terrorism.
Most banks that have set up in Syria have been from Jordan, Lebanon and the oil producing Gulf.
"The sanctions are politically motivated as far as Syria is concerned," said Mayaleh.
"We are committed to safeguards against money laundering."
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